Descriptive modeling is a mathematical process that describes real-world events and the relationships between factors responsible for them. The process is used by consumer-driven organizations to help them target their marketing and advertising efforts.
In descriptive modeling, customer groups are clustered according to demographics, purchasing behavior, expressed interests and other descriptive factors. Statistics can identify where the customer groups share similarities and where they differ. The most active customers get special attention because they offer the greatest ROI (return on investment).
The main aspects of descriptive modeling include:
- Customer segmentation: Partitions a customer base into groups with various impacts on marketing and service.
- Value-based segmentation: Identifies and quantifies the value of a customer to the organization.
- Behavior-based segmentation: Analyzes customer product usage and purchasing patterns.
- Needs-based segmentation: Identifies ways to capitalize on motives that drive customer behavior.
Descriptive modeling can help an organization to understand its customers, but predictive modeling is necessary to facilitate the desired outcomes. Both descriptive and predictive modeling constitute key elements of data mining and Web mining.