DECS-431
Business Analytics II
Week 1, Class 1
Daniel Martin
d-martin@kellogg.northwestern.edu
please,
silence or put CELL PHONES on airplane mode
close your EMAIL, CHAT, BROWSER
put away your LAPTOPS and CELL PHONES
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DECS-431: Business Analytics II
• Welcome!
• Purpose: Answer business questions with data
I Forming questions
I Answering questions
I Reporting answers
• Why? Recruiters/employers want these skills
I Transition from gut instincts to analytics
I Era of “Big Data”
I Almost all roles/jobs impacted
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Business Analytics in Action
But don’t take my word for it...
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Business Analytics in Action
• Post-internship survey of my students for 3 years (n=210)
I Were you asked to answer a business question with data?
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Business Analytics in Action
• Amazon (Product Management)
I Question: Should we pursue a strategic opportunity for a new
technology implementation?
I Data: Combination of business, technological, and financial data
• Bain and Company (Consulting)
I Question: How is regional marketshare being affected by new entrants
in the retail/grocery space?
I Data: Annual shares and sales for all players in 917 markets
• Google (Finance)
I Question: What will P&L be over the next 5 years?
I Data: Using historical revenue/cost data (dataset w/ region,
segment, time series, etc.)
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Business Analytics in Action
• A.T. Kearney (Summer Associate) • Barclays (Banking)
• AB InBev (Global People Team) • Barclays (Investment Banking - Financial Institutions
• AbbVie (Corporate Strategy - BD&A) Group)
• Accenture Strategy (Strategy Consultant) • BCG (Consultant)
• Adobe (Customer Testing Program Analyst) • BCG (Data analysis and give recommendation)
• Allianz Real Estate (Acquisitions)
• Blue Apron (Strategy & Operations)
• Amazon (Amazon Logistics - Global Strategy)
• Boston Consulting Group (Consultant)
• Amazon (Product Manager)
• Amazon (Senior Product Manager - Technical) • Brunswick Boat Group (Corporate Strategy)
• Amazon (Vendor Manager within the PC Category) • Bundles of Health (Founder / CEO)
• Amazon, Inc. (Canada Supply Chain) • Calvert Foundation (Associate)
• Amphenol (Business Development Manager (Internal • CancerIQ (Strategic Marketing)
Strategy))
• Capital Group (Brand Strategy)
• Apple (Capital Expenditure Program Manager)
• Apple (Operations)
• CBRE (Finance Intern)
• Apple (Operations Product Development) • Citadel (Industrials Long/Short Hedge Fund)
• Bain (Consultant) • City Capital Ventures (PE) (Associate)
• Bain & Company (Consultant) • Colfax Corporation (Strategy Internship)
• Bain & Company (Generalist Consultant)
• Bain & Company (Summer Associate) • And more...
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• Conduent (Internal Strategy team) • Genentech (Pipeline and Portfolio Planning)
• D & G Consulting (Consultant) • General Mills (Associate Marketing Manager)
• DaVita (Strategy, Home Therapies) • Glenfarne Group (as a Summer Associate)
• Dean & DeLuca (Summer Intern) • Google (Product Manager)
• Dell (Innovation & Product Strategy) • Google (Product Technology manager, Ads data and
• Dell EMC (Strategy Consultingg) tools)
• Deloitte Consulting (Summer Associate ) • Google (Strategy)
• Discover Financial Services (Digital User Experience, • Google, McKinsey (Strategic Operations, Summer
Marketing) Associate)
• Ecolab (Strategy Group) • Greystar (Development Associate)
• Ecotec International (Operations, strategy and • Grubhub (Product Management)
finance) • HERE Technologies (Corporate Strategy)
• Edwards LifeSciences (General Intern for start-up • HP Inc. (Corporate Strategy)
project)
• Hustle (Business Development)
• Evercore (Summer Associate)
• Inspiring Capital (Intern consultant)
• Exelon Corporation (Technology Innovation)
• Intermountain Healthcare (Administrative Intern)
• ExxonMobil (Summer Intern)
• intuitive surgical (clinical marketing)
• Facebook (Product Operations)
• John Deere (John Deere Financial - Global Strategy)
• Facebook (Strategy & Ops)
• Johnson & Johnson (Brand Management)
• Fidelity International (Buyside equity analyst)
• Johnson & Johnson (Marketing - Launch of 2 new
• Fidelity Labs (Product Manager in Innovation and products in Colombia)
Design Thinking)
• Fortive (Marketing/General Management ) • And more...
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• JP Morgan (Private Wealth Management) • P&G (Pantene - BrAND MANAGEMENT INTERN)
• Kaiser Permanente (Analyst / Consultant) • PepsiCo (Strategy)
• Kaiser Permanente (Internal Consulting (Quality and • Personal Capital (Marketing and Business
Operations)) Development)
• REDF (Intern assigned to grow a social enterprise)
• Kirkland & Elliss LLP (Summer Legal Associate
Restructuring) • SC Johnson (Brand Management)
• KPMG (Consultant) • SmartAsset (Product Management)
• Spotify (Data)
• L.E.K. Consulting (Consultant)
• Starbucks (Product Marketing)
• Livving Proof (Corporate Strategy)
• Stryker (Strategy)
• Marathon Capital (IB Associate) • Sunbridge Capital Management (Summer Associate)
• MasterCard (MBA Summer Consultant) • UnitedHealth Group Ventures (MBA Intern)
• McKinsey & Co (Consultant/Associate) • Viacom (Strategy and Operations)
• McKinsey & Company (Summer Associate) • Visa (Corporate finance)
• Microsoft (Cloud and Enterprise, Cloud Market • Visa (Human Resources)
Intelligence) • VMware (Product Marketing)
• Microsoft (Marketing / Business Development) • Walmart (Merchandising Operations - Category
Management)
• Nike (Data Analytics)
• William Blair (Investment Banking - Mergers and
• Nike (Finance) Acquisition)
And that was just in the summer of 2016!
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INFORMATION ABOUT YOU
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About You
• Data: Class survey (both sections, n=124)
I Thanks for responding!
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About You
• Background in stats:
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About You
• Comfort with computer programming:
I 1 = Never programmed before
I 5 = Computer science major
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About You
• Student section?
I Lots of sections and lots of exclamation points!
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About You
• Different backgrounds & personalities
• Will feel fast to some
I Extra review sessions (each week)
I Extra-help office hours (each week)
• Will feel slow to others
I Extra technical material
I Extra discussion sessions
• My promise: Everyone will improve at answering business
questions with data
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INFORMATION ABOUT ME
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About Me
• Daniel Martin
• Assistant Professor at Kellogg (MEDS Department)
• Previously:
I Assistant Professor at Paris School of Economics
I Ph.D. in Economics from New York University
I B.A. in Economics from Vanderbilt
I Born and raised in Atlanta
• Email: d-martin@kellogg.northwestern.edu
• Office: 3131
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About Me
• Fourth year teaching DECS-431
• Five Kellogg Impact Awards
First Kellogg Students 2014
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About Me
• Fourth year teaching DECS-431
• Five Kellogg Impact Awards
First Kellogg Students 2016
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About Me
• M.B.A. from University of North Carolina
• Graduation: 2002!
• Focus: Entrepreneurship
Venture Capital Investment Competition 2001
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About Me
• Co-Founder of Worksmart, Inc.
• Founded: 2002
• Today: Highest-Ranked MSP in the Carolinas
Launching the Company 2002
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15 Years of Data Analytics
• Entrepreneurship: Business metrics
I How effective are marketing efforts? Data: Sales numbers
I Are we allocating resources effectively? Data: P&L for other firms
• Big Pharma: Health economics (Genentech, Pfizer, etc.)
I How are pharmaceutical drugs used? Data: Insurance claims
I How effective/dangerous are drugs? Data: Clinical trials
• Research: “Economics of Attention”
I Do consumers pay attention to prices? Data: Grocery purchases
I Do job searchers pay attention to offer details? Data: Job quits
• Same methodology: Data analytics!
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INFORMATION ABOUT THE CLASS
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Your Interests
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About the Class
• A lot of useful information is in the Syllabus. Let’s go over it
together...
• All materials and information relevant for this class is/will be posted
on Canvas
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Best Practices
• If material feels fast, review slides before class
• If you feel behind or want to see other examples, attend weekly
review sessions
I Sessions and TA highly rated
• Use the Academic Services tutoring program
• Practice practice practice!
• Best source of extra problems: Textbook
I Another source of extra problems: Lecture slides
I Another source of extra problems: Exam practice problems
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LIAISON
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LET’S START
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Autoparts Case
• What do you want to know about sales of the store in Skokie?
• What factors might contribute to this?
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Autoparts Case
• What are the average sales of the other end-cap stores in Illinois?
I Hint: Look on your printout!
I Since sales are in thousands of $, then 3000 means 3 million dollars
• Are sales for the store in Skokie higher or lower than this average?
I This is a statistical question
• Is the average sales for these other stores a “fair” comparison?
I This is a business question!
• To make a better comparison, we need to look at the data...
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Stata
1. Open Stata
2. Use “User / Record your work / Open Log” to record your results
3. Import autoparts.dta using “User / Load Data / Stata Dataset”
4. Use Data Browser to look at data
I Data are laid out in a spreadsheet: 24 rows and 3 columns
I We call 24 the “sample size” or “observations”
I We call 3 the “variables”
5. Careful with Save icon - saves changes to the data, not your results!
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Always Know Units (AKU)
• Use the correct units! Is it in $? In thousands of $?
I Since inc3mi is in $, then 70000 means $70000
I Since sales are in thousands of $, then 3000 means 3 million dollars
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Autoparts Case: Practice Questions
• What are the average sales of stores in the data set?
I User / Core Statistics / Univariate Statistics / Standard
I Or type: summarize
I Remember AKU!
• If you want to perform some simple calculations in Stata, you need
to use a command: display
I For example, to calculate 10 ∗ 1000, type:
display 10*1000
• Are average sales higher or lower than sales for the store in Skokie?
• To make a better comparison, we need to look deeper...
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Autoparts Case: Practice Questions
• What is the relationship between sales and income?
• Create a plot of sales and income:
I User / Core Statistics Menu / Bivariate Statistics / Bivariate Plots
I To obtain scatterplot: Create / Basic plot / Scatter
I To obtain the best fit line: Create / Fit plots / Linear prediction
• Run a regression of sales onto income:
I User / Core Statistics Menu / Regression
I Or type: regress sales inc3mi
• The regression also gives you the best line!
I Value for inc3mi from the output is the slope
I Value for cons from the output is the intercept
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Autoparts Case: Practice Questions
• What is your estimate for the average sales of stores similar to
Skokie, i.e., with $70000 average income in the 3-mile radius?
I Hint: Use values for cons and inc3mi from the regress output
• If you want to use the output values in Stata, you need to use: b[]
I To calculate value for inc3mi from the output times 70000, type:
display b[inc3mi]*70000
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Next Class
• The simplest way to estimate the average of variable y for
observations with characteristics x is by estimating a Linear
Regression Model
I We will talk more about this in the next class
For next class:
• Be sure you have Stata and the Data Files downloaded on your
laptop - we will use again during part of class
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Autoparts Case: Extra Practice Questions
• What is your estimate for the average sales of stores with an
average monthly income in the 3-mile radius equal to $5000?
• Run a regression of sales onto population
• Using this regression, what is your estimate for the average sales of
stores similar to Skokie, i.e., with a population of 66000 in the
3-mile radius?
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