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Data Mining: The Good, the Bad, and the Ugly

Data Mining: The Good, the Bad, and the Ugly. IBM Data Mining Advertisements. How Does He Know? Stinky Artichoke Hearts. Other CRM Software: People Soft, SAP, Oracle, Microsoft Dynamics. One or Many Prices? Price Discrimination. Revenue of $400. or < $ 800?. Examples: Dell, Amazon.

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Data Mining: The Good, the Bad, and the Ugly

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  1. Data Mining: The Good, the Bad, and the Ugly

  2. IBM Data Mining Advertisements • How Does He Know? • Stinky Artichoke Hearts Other CRM Software: People Soft, SAP, Oracle, Microsoft Dynamics

  3. One or Many Prices?Price Discrimination Revenue of $400 or <$800? Examples: Dell, Amazon

  4. Data Mining =>Product Bundling, Mass Customization • Tesco’s Club Card (15 million members) • Other Loyalty Cards • Credit Cards • Online Purchases

  5. Sell Singly or Sell Together? Site Licensing $3,000 vs. < $5,500

  6. Sell Singly or Together? Complementarities + Bundling vs. <$300: Pharmaceutical ‘Suites’ $220

  7. Network Effect: Increasing Returns (Brian Arthur’s El Faro Bar) Profit Max Unstable

  8. Mass Customization =>Power Law, Long Tail Amazon: Non-Repeats 50% <= Product Varieties =>

  9. THE PYRAMID The FORTUNE At The Bottom of The Fortune at the Bottom of the Pyramid: Eradicating Poverty Through Profits, C.K. Prahalad, Wharton School Pulbishing, 2005 Stodder, Sustainability

  10. Bottom Heavy on Population

  11. Still Top Heavy on Wealth

  12. But Most GDP in 3rd World Countriesis in the Informal Sector • Hernando de Soto (“Mystery of Capital”) estimates: http://www.nytimes.com/books/first/d/desoto-capital.html

  13. Why is Corruption So Much More Taxing Than Tax? Arbitrariness KillsShang-Jin WeiNBER Working Paper No. 6255 http://www.nber.org/papers/w6255 Stodder, Sustainability

  14. BoP Examples: • Cemex(3rd Largest Manufacturer in World) • – Patrimonio Hoy • Johnson & Johnson(#32, Fortune 500) • – mini shampoos • – low H20 detergent • ICICI(3rd Largest Bank in India) • – Village Kiosks Stodder, Sustainability

  15. Grameen-inspired Micro Finance • Pierre Omidyar(founder of EBay) - $100 Million Tufts Micro Finance Center • Compartamos(Citigroup $70 Million) - 500,000 Customers • Gates, Dell, & Google Foundations - Large Micro Finance initiatives “Millions for Millions”, Connie Bruck, New Yorker, 10/20/06 http://www.newyorker.com/fact/content/articles/061030fa_fact1 Stodder, Sustainability

  16. Positive Interaction of Price Discrimination, Bundling, Mass Customization, Network ExternalitiesAll Create Greater ‘Lock-in’

  17. “You have zero privacy anyway. Get over it.” - Sun Microsystems CEO Scott McNealy, 1999Super Sad True Love Story – Gary Shteyngart, 2010

  18. Privacy Remedies? • Regulation by Law (Europe) • Regulation by Scandal (US) • Customer Consent, Privacy Promises • Anonymizing Data • Restricted Levels of Access • Two-Way Transparency? (davidbrin.com)

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