UNDERSTAND THE DIFFERENCE BETWEEN DESCRIPTIVE, PREDITIVE AND PRESCRITIVE ANALYSIS
To analyze the data of a company, it is necessary to choose a better method, such as descriptive, predictive and prescriptive analysis. In the end, each one can be used at different times to achieve a better result and understand more easily what we want to say with the collected information.
Check out the differences between these types of analyzes and know when you use them on a day-to-day basis.
What are the differences between descriptive, predictive and prescriptive analysis?
In general, the different types of analysis respond to certain questions and provide data on situations in which a company finds itself or could find itself in the current market.
Descriptive analysis
The focus is to use the data to generate an understanding of what happens in the company in a certain event or period.
For this, it is possible to select specific information and add indicators, which make it possible to conclude the scenarios that occurred.
Predictive analytics
As the name says, the focus of this method is to use techniques that seek to foresee what could happen in different scenarios of the company.
Likewise, it uses statistical models, with the aim of identifying trends. Beforehand, it is possible to create new products, prepare for certain demands and avoid crises.
Prescriptive analysis
In prescriptive analysis, or focus on testing actions by means of data, with the objective of solving a problem or making the best decisions in a new undertaking.
In this way, it is possible to use algorithms and simulation techniques to determine which is the best decision-maker given the problem that needs to be solved.
When and how do you do them?
To make the descriptive analysis it is important to define a period to be analyzed. For example, it is possible to select the last six months of a company or study, in order to observe its growth compared to the same period of the previous year.
Predictive analysis is ideal for when you want to make impactful decisions in your organization. For this reason, whenever a company identifies a new business opportunity or an unfavorable scenario, it is possible to apply it to understand what can happen.
Likewise, it needs to consider, mainly they identify patterns that evolve or decrease in relation to a certain product, billing or consumer behavior.
Finally, the prescriptive analysis can be applied to any situation that forces the company to make decisions in the future.
In this way, it is important to consider tools that can be used to establish scenarios and their consequences..
How does the company apply them on a day-to-day basis?
In case of descriptive analysis, it is useful on a day-to-day basis for the company that wants to understand its position in the market. For example, it is possible to assess the numbers of sales, in addition to analyzing the situation of two competitors, to know in which position the organization is.
In case of predictive analysis, it is important to prepare for imminent situations. For example, during the pandemic, there was a large increase in online purchases. With this, a company can identify the trend it is going to follow, defining new products, preparing stock and investing in a faster delivery.
Finally, the prescriptive analysis is useful mainly before situations already detected.
Carrying out descriptive predictive and prescriptive analysis in a company is a way of learning from the past, observing the present and solving the challenges foreseen for the future. In this way, the company is not caught unprepared in the face of crises and opportunities and will know how to act to establish itself in its market.
