Yes, you read that right! Maths, the biggest nemesis of every child’s school life is the big differentiator between a moderately successful and a wildly successful company. A lot of the things that we do today are online. All the products that we buy, our entire online behaviour, etc. is recorded on an individual level by companies who operate in that space. All this data is nothing but numbers that are stored on an excel spreadsheet.
Most of the decisions regarding a company are based on the data that these spreadsheets have, like which are the most popular products, which are the upcoming products, what should be the pricing, what should be the discount, when is the best time to target these customers with these discounts, targeting on social media or via email. Analysis of this data tells them the best way to get a good return on their time and money invested in each of these areas.
Senior managements have this data analyzed using advanced analytics, business maths and statistical model in order to come to decide their next course of action. In case the results are inconclusive, they may conduct research which again uses analytics, statistics & business maths.
It is an executive’s ability to understand, analyze and best use this data to make decisions that will benefit the company. The right usage of data can allow a company to target the right customers at the right time in order to get them to buy more of their products. Other companies may also be successful, but the difference will be in the time taken to reach sales targets.
Quoting an example to explain this. Amazon entered India much after Snapdeal, but it still beat the company in terms of the goods sold. Some may say that Amazon has deep pockets, but to do so in a short period of time, is a tough task. The reason lies in data analytics. They are successfully able to use consumer data to target the customers who have a greater probability of buying their products. This is also the reason why Flipkart is able to give a tough fight to Amazon, despite it not being as old and well funded as Amazon. It is able to use analytics, stats and business maths for understanding their consumers’ mindsets and target the right ones to get the best ROI.
Business Maths and analytics is used extensively for predictive analytics. FMCG companies use the sales data to predict the amount of sales that they can have in a given year. In order to predict the sales for a year, they first note the economic condition of the economy. They then match it to a previous year with a similar economic conditions. Using certain variable factors (ex: weather), statistical and Business maths formulae, they are able to estimate the sales of a product for that particular year.
In case an existing product is seen to be losing sales, they may scale down production, stop marketing it and divert precious resources to other products. This could also result in the company avoiding major investments like the addition of another factory. Thus, predictive analysis helps the company save working capital from getting wasted.
BSE Institute Ltd (BIL) offers an Advance Management Program (AMP) that is designed for Senior Management executives who are about to make a transition to the C level suite and lead their corporations.
Analytics and maths may have been our most dreaded subjects as kids, but they certainly will continue to be important long after our retirements. We cannot ignore these as the World of Finance, Marketing & Management runs entirely on numbers and data and the one with the knowledge to manage it wins for the simple reason – “Knowledge is Power”.