Predictive POS for Consumer Behavior Prediction in Alliances

One major problem with Alliance’s current use of POS is that it is not predictive. The information from the case study reveals that the organization is using its POS system to analyze past sales. However, what they are failing to do is make predictions on future consumer behavior. The past can be a valuable tool whenever an organization is attempting to analyze behavior. One major downside to such tactics is that markets sometimes rapidly change.

In the past decade, technology has drastically changed the entire world of consumer preference.

 Companies that continue to rely on historical data may be at a major disadvantage when compared with other companies that use advanced predictive forecasts to anticipate consumer demand.

One method of improving the current system at Alliance would be to program the system to make predictions for the future. The case study states that the current system helps to rapidly replenish items whenever they run low. However, a better idea would be to predict certain influxes of demand demand-basedason (Shmueli & Koppius, 2010).

Some holidays are renowned for drawing in large numbers of shoppers. For example, days like Black Friday and other holidays are major shopping times when people rush into stores and purchase large quantities of goods. A more advanced POS system would track specific holidays and determine if there was a major increase in consumer spending. On holidays in which there was a major increase, it makes sense for the store to prepare in advance allianceance could use the information from their POS system to raise their stock of certain items whenever they are coming close to a holiday.

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A poorly planned system is one that merely analyzes past information. A much better system uses past information in conjunction with other sources to tote predictions.

Another way in which Alliance could use its POS system is to track specific hours in which certain purchases are more common. In sales, sometimes people buy a certain product more at a specific time during the day (Liberatore & Luo, 2010). If Alliance was able to determine that customers were purchasing one or more products more frequently at a certain time of day, then it would give them a major competitive advantage. They could hold short-term sales and other immediate promotions to lure people into purchasing the product whenever it was a time when the product is in high demand. ObviouslyItlways easy to determine exactly when a product is in high demand. Most markets are influenced by a wide range of different factors. A short-term analysis may produce results that make it seem like people are purchasing one product more frequently at a specific time, but then a more detailed analysis may reveal that other factors play a role. Markets are complex entities that respond to many different factors. Companies can benefit from paying attention to as many factors as possible when making predictions.

Cutting Costs

Businesses can cut costs by following several different practices. One method of cutting costs is to focus on demand. If consumers are not purchasing a product or service for a prolonged period, then it is typically the best option to get rid of, or reduce, that product or service.

Some companies spend more time focusing on other aspects of business and fail to optimize their response to supply and demand (Katz & Murphy, 1991). Another way of cutting costs is to outsource production. America has many different labor laws and regulations that can have a major impact on ultimate profitability. Organizations that outsource labor or production to different countries typically benefit from reduced regulations. As such, they can pay lower wages and benefit from increased profits. Although outsourcing does raise many ethical concerns, the fact is true that it often drastically reduces operating costs for an organization.

Another method of cutting costs is to implement business analytics software. The modern business world is filled with software that can analyze many different aspects of things like supply and demand. By using such software, organizations can stand to reduce their costs and increase their competitive advantage. The software can provide them with valuable information about consumer preferences and shifts in demand.

New Approach

One new approach would be to ask customers for their emails whenever they are making purchases. They would be given the option. It would be controversial for a company to collect email addresses without first obtaining permission. Customers could give their email in exchange for being signed up for a rewards program. Customers who opt-in to the program would then be notified by email whenever any major sales were taking place at Alliance.

Another potential option would be to create a customer rewards program. The rewards program at Alliance would give customers the benefit of getting discounts on their future purchases. On the other hand, it would also provide Alliance with valuable information about their base of customers and what tendencies they have when shopping. By obtaining such information, they could then tailor their demand to meet the needs of their loyal customers.

Privacy Concerns

The issue of privacy is always something important in the field of shopping and consumer habits. Although people do enjoy getting the occasional good deal on a purchase, many individuals do not like to have their spending habits tracked. In most cases, tracking a consumer’s spending would not cause any major problems. However, there are also cases in which an entire organization was held liable as a result of their unethical tracking of consumer spending. For example, imagine that a consumer tries to make a private purchase of something for their significant other. They want to keep it a secret for a present or some other holiday. Then, imagine that an organization ruins their entire holiday and invades their privacy by sending them an unsolicited email with information about their recent purchase. Most consumers would not take kindly to such behavior.

The ethical issue of tracking consumer spending habits is much more complex in the modern world. The Internet has changed the way that consumers interact with organizations. For example, some unethical Internet companies will track which websites a consumer spends the most time on. Then, they will target their marketing efforts to maximize their chances of making a sale. While such methods are effective in some cases, they are also highly unethical.

Individuals browse the Internet under the assumption that they are not being monitored or tracked. It is highly unethical for an organization to secretly track how someone shops to maximize their profits. Although such tactics are unethical, they still occur regularly on the Internet.

References

1. Katz, L. F., & Murphy, K. M. (1991). Changes in relative wages, 1963-1987: Supply and demand factors (No. w3927). National Bureau of Economic Research.
2. Liberatore, M. J., & Luo, W. (2010). The analytics movement: Implications for operations research. Interfaces, 40(4), 313-324. Shmueli, G., & Koppius, O. (2010). Predictive analytics in information systems research. Robert Smith School Research Paper No. RHS, 06-138.