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Types of Analytics

Types of Analytics

Analytics is a process of examining data to gain insights and make better decisions. There are four different types of analytics: descriptive, diagnostic, predictive, and prescriptive. Each type serves a different purpose and uses different methods to extract insights from data. Let's dive into each type and understand them with an example.

Descriptive Analytics?

It is the most basic type of analytics. It summarizes historical data to understand what happened in the past. It is used to answer questions like what happened, how many times it happened, and when it happened. It provides insights into patterns, trends, and relationships in the data.

Example: Suppose you own a retail store, and you want to analyze your sales data for the last year. You can use descriptive analytics to understand the total sales revenue, the number of customers, the average purchase amount, and the most popular products sold. This information will help you make better business decisions and optimize your operations.


Diagnostic Analytics?

Diagnostic analytics is used to identify the root cause of a problem or an issue. It uses data to answer questions like why something happened or what caused it to happen. It helps in identifying the factors that led to a particular outcome.

Example: Suppose your retail store's sales have decreased over the last quarter. You can use diagnostic analytics to identify the reasons behind the decrease in sales. You can analyze data to identify whether the decrease was due to a decrease in the number of customers or a decrease in the average purchase amount. Once you identify the cause, you can take corrective actions to address the issue.


Predictive Analytics?

Predictive analytics is used to make predictions about the future based on historical data. It answers questions like "What is likely to happen?" and "When is it likely to happen?". It uses statistical models and machine learning algorithms to identify patterns and trends in the data and predict future outcomes. It helps in identifying potential opportunities and risks.

Example: Suppose you want to predict the sales revenue for the next quarter. You can use predictive analytics to analyze historical sales data and identify the factors that impact sales. You can then use this information to create a predictive model that can forecast sales for the next quarter. This information can help you plan your inventory and marketing strategy accordingly.


Prescriptive Analytics?

Prescriptive analytics is the most advanced type of analytics. It involves using data to make recommendations about what actions to take. Prescriptive analytics answers questions like "What should we do?" and "What is the best course of action?". It is focused on using data to make decisions that will lead to better outcomes. It helps in optimizing decision-making processes.

Example: Suppose you want to increase sales revenue for your retail store. You can use prescriptive analytics to identify the best course of action. You can analyze data to identify the most profitable products and the customer segments with the highest purchasing power. Based on this analysis, you can create a recommendation engine that provides personalized recommendations to customers, increasing the likelihood of a purchase.




In conclusion, descriptive, diagnostic, predictive, and prescriptive analytics are essential for making data-driven decisions. Each type serves a different purpose and provides different insights. Understanding these types of analytics can help businesses optimize their operations, identify opportunities and risks, and make better decisions.