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JessupJamesPTRComprehensiveAssignment

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JessupJamesPTRComprehensiveAssignment

  1. 1.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com Chipotle Mexican Grill Social Media Pattern Analysis Patterns and Recognition Comprehensive Assignment JAMES JESSUP 3.25.2015
  2. 2.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com CONTENTS INTRODUCTION……………………………….………………….…………………………….3 METHODOLOGIES ……………………………………………………………………….……3 BAYESIAN PROBABILITY OF INCREASED STOCK PRICE …………………………….3 COST OF DATA/ VALUE OF DATA …………………………………………..………….….4 DATA PATTERNS AND TRENDS ………………………………………………..…………..5 CLUSTERING …………………………………………………………………………………..6 CORRELATION ANALYSIS …………………………………………………………………..7 NETWORK ANALYSIS ……………………………………………………….………………..8 EMERGING TRENDS ……………………………………….…………………………..……..8 OPTIMIZATION ……………………………………………………………..……………….....9 TREND ANALYSIS AND FORECASTS …………………………………………...………..9 RECOMMENDATIONS ……………………………………………….………………..……..11 CONCLUSION……………………………………………………………………….………....11 APPENDIX………………………………………………………………………………………12 REFERENCES…………………………………………………………….……………………15
  3. 3.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com Chipotle Mexican Grill Introduction Chipotle Mexican Grill (NYSE: CMG) is a chain of Quick-Service-Restaurants that serve Mexican-themed foods using high quality ingredients. Started in 1993, the chain has 1600 restaurants. Their focus is on fresh, high-quality ingredients and environmentally responsible business and food practices. Sales in 2013 were $3.21 Billion, with an upward trend over the previous five years. (Jessup 2014) Like many companies, Chipotle is taking advantage of social media trends. With 2.4 million likes on Facebook and 566K followers on Twitter, there are many insights to be taken advantage of. This report explores some of the patters observed from analysis of Chipotle’s social media data. Methodologies Data was gathered about Chipotle’s Twitter account (#ChipotleTweets) using an online site Twitonomy.com. Twitonomy collects information about Tweets, Followers, ReTweets, Favorites, and summarizes this information. Twitter provides 3200 tweets, which gave several days worth of information. The sample size had to be limited to this amount. Given more resources, a larger sample could be collected and analyzed. Information about Chipotle’s Facebook account comes from SimplyMeasured.com Data about Chipotle’s stock price was provided by NASDAQ. Bayesian Probability of Increased Stock Price A Word Map of Chipotle’s Tweets provided the most common words used in the text of their tweets. (SEE APPENDIX Figure 1) One of the most frequent words of note was the word “Sorry”. This begs the question: Does use of the word “Sorry” have an effect on the stock price? This was converted into a question involving Bayes Theorem: What is the probability of a positive stock price change, given a certain ratio of comments with the word “Sorry” in them?
  4. 4.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com Data was collected and analyzed for two factors: Dates with higher-than-average use of the word “Sorry” Dates where the stock price had a positive change Results: CMG Price Change (A) (+) change (-) neg change Sorry Ratio (B) >Average 5 2 7 <Average 1 2 3 6 4 10 P (A|B)=(P(B|A)*P(A)) / P(B) P (A|B)= (5/7* 6/10) / 7/10 = .42857 Given a higher-than-average ratio of comments with the word “Sorry” in them, there is a 43% chance the stock price will increase. Conversely, there is a 66% chance that the stock price will have a positive increase, given a lower-than-average “Sorry” ratio. P (+change)|(<Average)= (1/3* 6/10) / 3/10 = .66 If the ratio of Tweets including the word “Sorry” goes below the average, there is a higher-than-average chance of a positive stock price change. It would be wise to monitor this, and when the opening price is down, look to the Twitter-verse and see if there is anything that needs to be apologized for! Cost of Data/ Value of Data The cost of an annual subscription to Twitonomy is a very reasonable $199.00. The average annual salary for a Social Media Manager in Denver CO (Chipotle’s headquarters) is $45,775. (Payscale 2015) The monetary value of Social Media Management is difficult to quantify. “56% of marketers still list the ‘inability to tie social media to business outcomes’ as the largest pain point of measuring social media ROI.” (Wong/ Forbes 2014) If one could predict stock price increases with 66% accuracy, this alone would prove invaluable. A company’s ability to positively affect their own stock price, by responding to social media would be similarly invaluable. It is VASTLY worth the expense for a company of Chipotle’s size to measure and monitor their social media presence.
  5. 5.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com Source:  http://www.socialmediaexaminer.com/SocialMediaMarketingIndustryReport2014.pdf   Data Patterns and Trends Twitonomy provided data and summarizations of Chipotle’s Twitter usage, followers and the text of the last 3200 tweets. The relevant features that could be extracted were: Date Response or original Tweet The agent who tweeted Number of Retweets Number of Favorites Nasdaq provided the following information about the stock prices: Closing Price Volume of shares traded Opening Price Daily High Daily Low Change from Previous Day’s Closing Price There was too little data to tease out Consumer Sentiment. It would have been interested to see if one particular agent was associated with better sentiment. It turns out, the agent DOES seem to be correlated to Stock Price movement. More on that follows. Some variables are both dependent variables AND independent variables. Correlation analysis was done in a matrix to see which variables were most strongly correlated. Temporal trends were found for number of tweets, with daily trends peaking in the evenings, and weekly trends peaking on Wednesdays. (SEE APPENDIX, Figures 4, 5, 6, and 7 for trend visualizations) Stock price tended to be higher Thursdays, but not significantly so.
  6. 6.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com Clustering Facebook posts were analyzed using SimplyMeasured. They were grouped by Type of post; Link, Photo, Status, Video or Other and these clusters were analyzed for Engagement. This was compared to Chipotle’s competitor in the Quick Service Restaurant, Quiznos Subs. (Image provided by SimplyMeasured) Users responded much more frequently to Images than other types of posts. Additional suggested research would center on clustering Chipotle’s Twitter followers. These would be clustered by Age Gender Marital status Family status Number of Followers Number of Tweets It would be possible to use K-Means clustering to assign Followers to a certain cluster, given that the number of desired clusters is known. Fuzzy C-means clustering would allow a user to belong to two or more clusters. This method would not be recommended, as it would lead to overlap and duplicate entries. This level of detail about the Twitter followers was not available at this time, but is recommended for future research.
  7. 7.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com Correlation Analysis Correlation analysis was run between all the variables to see which ones were most strongly correlated. This heat map shows areas of the greatest correlation in Red and Green. Yellow shows weaker correlations. Several strong correlations were discarded as obvious (Candice generates many tweets, therefore, she has a high Tweet ratio; Opening price is related to closing price.) Significant correlations were sought across categories. The number of Tweets containing the word “Sorry” had a strong negative correlation with Opening Stock Price, Daily High Stock Price and Daily Low stock price. It was moderately positively correlated with the volume and the Change in Stock price. Joe is positively correlated with the closing price. He tweets, and the price goes up. James and Myra are negatively correlated with the stock price. When they Tweet, the Price goes down. Wayne and James are moderately correlated with a positive change in stock price. It should be noted that these are Correlations and do not imply causation. To test for temporal associations, the correlations were run using both the preceding day and the following day’s stock prices (to see if a low stock price one day caused and increase in Tweets the following day, or vice verse). The correlations were generally lower, lending to the idea that these correlations are not causal, but coincidentally associated. Individual tweets are sometimes spatially associated. These tweets are about customer service issues at individual locations, rather than affecting Chipotle on a national or global level.
  8. 8.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com Network Analysis Network analysis can be used to see how Chipotle’s Super-Users use social media to influence others. Users  most   retweeted   @FoodRev  (1),  @XavierMission  (1),  @DaniNierenberg  (1),  @sarahfoodtank  (1),   @esmailyas  (1),  @SKCAcademy  (1),  @thenataliegray  (1),  @bleachersmusic  (1)   Users  most   replied  to   @StephenAnfield  (11),  @nathanieljlars  (9),  @tikaliciousss  (8),  @KD_TRE  (7),   @waryhulk  (7),  @willythewormm  (6),  @RangersFan4205  (6),  @NYFarmer  (5),   @meganxbrown  (5),  @the1bark  (5)   Users  most   mentioned   @ChipotleUK  (16),  @StephenAnfield  (11),  @TEDxManhattan  (9),  @nathanieljlars   (9),  @tikaliciousss  (8),  @KD_TRE  (7),  @waryhulk  (7),  @RangersFan4205  (6),   @willythewormm  (6),  @_amberstars_  (5)       Wolfram Alpha has an excellent Network Analysis tool that allows users to see the clusters within their network. Campaigns can be developed to specifically target each cluster. (image source Wolphram Alpha) SimplyMeasured also provides a Content Detail report that answers the question: Which individual posts are successful? This can be linked to clusters and networked to mount a successful marketing campaign. (SEE APPENDIX Figure 3) Emerging Trends The data provided produced the following trends: Number of Tweets peaked in the evenings. (SEE APPENDIX Figure 4) Number of Tweets peaked Wednesday. (SEE APPENDIX Figure 5) Candice is the primary Tweeter. (SEE APPENDIX Figure 4)
  9. 9.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com Optimization With regards to Stock Price, the more times the word “Sorry” is tweeted, the greater the chance of a positive change in stock price. It helps if Joe, Wayne or James tweet, also. More thorough data would be needed and a more thorough analysis of followers to optimize a social media campaign. Optimization may not be quantifiable from a social media standpoint, but it can be improved, compared to either sales or stock price. Social media DOES affect bottom line, as noted in the correlation between “Sorry” appearing in a tweet, and positive change in stock price. Optimization may be as simple as having someone on Twitter and Facebook to respond to customer issues. Currently, it’s important enough to Chipotle to have someone doing this 24 hours a day, seven days a week. There are many tools to improve Facebook and Twitter Analytics. (SproutSocial, Topsy, Tweetonomy, Tweetreach) Many of these offer a “per query” price in the $1200 range. This was out of the scope of the budget for this report, however an enterprise-wide initiative to thoroughly explore the Twitterverse would be wise to engage one of these products. One of the other requirements is access to the Twitter account. Such access was not available for this research. Trend Analysis and Forecasts Chipotle’s stock price tends to be highest on Thursdays. Chipotle’s Tweets peak Wednesday evening. Chipotle’s stock is lowest Monday, following two days of decreased Twitter activity. This may well be coincidental. Thursday’s average increase over Monday is only 0.5% of Chipotle’s stock price. This is not enough to warrant action (at this point) but it IS worth observing and noting, should future data provide stronger conclusions. Chipotle’s stock does not appear to have short-term trends. Over the last five years, they’ve shown an average of 114 points per year in growth.
  10. 10.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com Next week, the anticipated price will be $682 (+/- 6.22) Over the next month, expect gains in the realm of $9.36, to a price of $689, (with a margin of error of $8.47). A year from now, the linear regression model supports a stock price of $794 per share. Estimated margin of error would be $61.53. Chipotle gains new Twitter followers every day. As long as they continue to stick to their corporate values of responsibility, fresh food and sustainable growth, I see no impediment to this trend. 0   200   400   600   800   16:00   5/19/10   7/19/10   9/15/10   11/11/10   1/11/11   3/11/11   5/10/11   7/8/11   9/6/11   11/2/11   1/3/12   3/2/12   5/1/12   6/28/12   8/27/12   10/24/12   12/26/12   2/26/13   4/25/13   6/24/13   8/21/13   10/18/13   12/17/13   2/18/14   4/16/14   6/16/14   8/13/14   10/10/14   12/9/14   2/9/15   CMG  Stock  Price  rises  114  points  annually     0   200   400   600   800   1000   3/23/10   3/23/11   3/23/12   3/23/13   3/23/14   3/23/15   3/23/16   Closing  Price  with  Projections   Closing  Price   Projected   Linear  (Closing  Price)  
  11. 11.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com Recommendations The data leads to three recommendations: It is worthwhile to analyze who is responding to Chipotle’s Social Media. There needs to be greater analysis of this and how Chipotle’s responses affect consumer sentiment and sales. These need to be quantified and managed strategically, aligned with Chipotle’s business objectives. Wolfram Alpha analytics can help with this, as well as creating a consistent message and strategy within the organization. Best practices should be documented, quantified and spread. Stock price is vulnerable to outside forces. This is true with all businesses. IT is recommended that these correlations be more thoroughly understood so they can be exploited. If one staff member has the power to raise stock prices, this should be used strategically. Algorithms could be developed to assist with this. ModelRisk is a statistical software package that can assist with this. Customer service is critical. The correlation between stock price and “Sorry”, though tenuous, does show a link between consumer sentiment and consumer confidence in a brand. This needs to be better understood. More detailed twitter analysis from Gnip will be useful. Conclusion Social media’s affect on a Stock’s price is not easily understood, but easily felt. In the competitive environment of Quick Service Restaurants, the customers want a company that will not only fill their stomachs, but warms their hearts. Understanding consumer sentiment through social media analysis will yield rich returns in consumer sentiment insights. The data is given freely by the consumers; it’s up to the corporations to make the most of it.
  12. 12.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com Appendix     Figure  1.  Word  Map  of  Chipotle’s  Tweets      
  13. 13.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com   Figure  2.  Heat  Map  of  Correlation  Matrix         Figure  3.  SimplyMeasured  Content  Detail       Figure  4.  Tweets  by  Time  of  Day       0   100   200   300   400   12am    1am    2am    3am    4am    5am    6am    7am    8am    9am    10am    11am    12pm    1pm    2pm    3pm    4pm    5pm    6pm    7pm    8pm    9pm    10pm    11pm   #  of  Tweets  peaks  in  the  Evening  
  14. 14.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com   Figure  5.  Daily  average  Tweets       Figure  6.  Number  of  Tweets  per  agent       Figure  7.  Average  Stock  Price   0   200   400   600   800   Sun    Mon    Tue    Wed    Thu    Fri    Sat   #  of  Tweets  peaks  Wednesday   0   200   400   600   800   1000   1200   Candice   Joe   Rusty   James   Skyllo   Myra   Wayne   Candice  is  the  Primary  Tweeter   664   664.5   665   665.5   666   666.5   667   667.5   668   668.5   669   Monday   Tuesday   Wednesday   Thursday   Friday   Average  Stock  Price  Dluctuates  0.5%  
  15. 15.     James Jessup Analytics | Winter Park, FL 32792 | www.jamesjessup.com References Chipotle: About Us. (n.d.). Retrieved November 21, 2014, from http://www.chipotle.com/en-us/company/about_us.aspx Chipotle Mexican Grill, Inc. Historical Stock Prices. (n.d.). Retrieved March 24, 2015, from http://www.nasdaq.com/symbol/cmg/historical Jessup, J. (2014, November 21) Bigger Better Faster More. Full Sail University. Winter Park, FL Social Media Manager Salary in Denver, Colorado (United States) United States Home Change Country Don't see what you are looking for?Get A Free Custom Salary Report ». (n.d.). Retrieved March 24, 2015, from http://www.payscale.com/research/US/Job=Social_Media_Manager/Salary/1e12d e1c/Denver-CO Stelzner, M. (2014, May 1). Social Media Marketing Industry Report. Retrieved March 24, 2015, from http://www.socialmediaexaminer.com/SocialMediaMarketingIndustryReport2014. pdf Wong, K. (2014, May 13). What Is The Value Of Social Media Engagement? Retrieved March 24, 2015, from http://www.forbes.com/sites/kylewong/2014/05/13/what-is-the-value-of-social- media-engagement/         THANK YOU. FOR MORE INFORMATION CONTACT: JAMES JESSUP JJESSUP@FULLSAIL.COM

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