What are the 4 Types of Data Analytics?

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Last updated on
04th Oct, 2022
27th Jul, 2017
What are the 4 Types of Data Analytics?

Data analytics has become a powerful tool in every industry across the globe. Data and big data provide businesses with insights about the business and the market that was previously unavailable to them. And with the help of data analytics, they can improve their strategy formulation and decision-making processes to become more efficient.  

There are many different types of data analytics that have emerged in the last few years. They all offer different kinds of boosts to a business that will benefit it in terms of financial performance, customer experience, improved efficiency, and much more. If you want to use the power of big data and improve your business, then we can help you. In this article, we are going to talk in detail about the types of big data analytics and what improvements they might bring to a modern business.  

If you want to learn data analytics and harness the power of big data and data science then you might benefit from enrolling in one of the best online big data courses by KnowledgeHut.  

What is Data Analytics?

If you are interested in the field of data analytics and the different type of data analytics, then first you need to learn what the term ‘data analytics’ entails. Data analysis is the process of analyzing scattered and raw data from various sources to classify and evaluate them to answer business-related questions and see trends in the market. Data analysis can be used to predict trends and business revenue, it can tell businesses which products sell better at which location, what is popular amongst their target audience, and more. All of this data can be used towards making the business flourish. That is why in today’s business world, data science and data analytics are irreplaceable. But data analytics is not just one process. In fact, data analytics is categorized into types. If you want to know more about the different types of data analytics, then we have all the answers you need in this article.  

Types of Data Analytics

We already know that data analytics is an integral part of modern business and it can help boost business revenue and also improve the customer experience. But the process through which data is analyzed determines its role in business and in which sectors it is to be used. Now, let us discuss an essential question, ‘Data analytics is categorized into how many types?’. There are four different data analytics types that we need to learn about: Descriptive, Diagnostic, Predictive, and Prescriptive. 

  1. Descriptive Data Analysis

Starting with the first pillar of modern data analysis, we have the descriptive analytics process. This is probably the most commonly used data analytics type businesses use to understand past events and customers. It is also the most simple data analytics type of the four that we will talk about today. It analyzes raw data and finds trends, and describes what happened or is happening based on the data. It helps you understand the trends for a certain period. If you want more insights into how your sales differ from month to month or if your channel views have increased, then this type of data analysis is the best way to go.  

  1. Diagnostic Data Analytics 

If descriptive analytics shows you what happened, then diagnostic analytics will tell you why something happened the way it did. A lot of people tend to skip this step in data analytics and go straight to predictive analytics, which we will talk about next. But identifying an anomaly or a mistake is not enough if you cannot figure out how it happened and how you can stop it from happening again. With the help of diagnostic analysis, data analysts can understand why a certain product did not do well in the market, or why customer satisfaction decreased in a certain month. If you want to find the reason behind all the positive and negative anomalies in your sales or performance, then the diagnostic analysis is the way to go for you.  

  1. Predictive Data Analysis

This is a more advanced form of analytics that is often used to answer the question ‘what will happen next?’ in a business situation. As the name suggests, this data analytics type predicts the future outcome of a situation depending on all the available data. This data will include both market trends and older data about your business performance, By combining these two, this data analytics type can predict how your business will perform during the next season or how well your videos will do next month.  

  1. Prescriptive Data Analytics

The fourth and final type of data analysis is known as predictive analytics. It provides analysts with an actionable course that the business should take to improve their performance after analyzing all the available data. Based on the results of the previous types of analytics, especially diagnostic and predictive analytics, it gives you a course of action to take which will help your business perform better. It is easily one of the most complicated yet important data analytics types.  

Importance of Data Analytics

Now that we have talked about the main 4 types of data analytics with examples, it is time for us to talk about why data analytics is such an important aspect for any business in 2022. Data analysis is used to examine and analyze huge amounts of data from various sources to find patterns and insights in order to reach a conclusion that will help the business. With the Automation and Machine Learning technologies available today, it is very easy even for a smaller business to analyze a large amount of data. That is why data analysis has become a very integral part of running a business in 2022. Here is why data analytics is important today:  

  1. Target the Right Customers  

In the world of business, a company needs to target the right customers with its ads and marketing. Data analytics can provide you with all the information regarding who your target customer base is and what pertains to them in terms of the market. That way, you can focus your marketing campaign to be more in tune with your target customer base. If they are more interested in your products, then they will also buy your products more, which will put you ahead of your competition.   

  1. Developing Products 

Data analysis offers businesses important insights such as market trends and the process of development. It can also give near-accurate future forecasts about what type of products are going to be popular. This can become a huge help in defining the process of product development. Companies can change their focus to the products that do well in the market instead of the ones that flop. The shift in focus helps them bring in more revenue and meet customer demands better.  

  1. Efficiency 

As we saw when we discussed data types in data analytics, the correct use of data analytics can improve the efficiency of any company. Not only does data analysis give us insight into what happened in the past and the reason behind it, but also what will happen in the future and what a business can do to make it better. It offers a course of action that can help businesses flourish. That is why improving efficiency is one of the main functions of data analytics and also the reason why it is such an important factor in a business.  

Ways to Use Data Analytics 

With the changing times, data analytics is becoming more and more important every day. We already discussed why data analytics is important. Now it is time to talk about the practical ways in which data science can be implemented to improve a business or a company. You have to remember that data science is not only limited to the field of business and can be used in a lot of other fields as well. So here are a few examples of data science that can be practically implemented in different fields.  

  1. Delivery and Logistics  

Many large logistics and delivery companies all over the world use data analysis to help in operations management. The companies can scout out the best delivery routes and even predict when the package is going to be delivered based on the conclusions found through data analytics. They can also track packages across channels as well. Data science has indeed made online shopping much more popular.  

  1. Manufacturing  

We already discussed how product development can be positively affected by data analysis. In the same way, it helps manufacturers make products for the companies. It can help with prediction analysis and budgeting to make sure the manufacturers make the right amount of product and make a profit.  

  1. Transportation 

This is one of the most important fields where data analytics is regularly used. Data analysis can help figure out the best route for transportation by analyzing network congestion and traffic data. It can plan alternate routes by analyzing vast amounts of data in a short time. Through this, traffic accidents have also reduced significantly.  

  1. Insurance  

In the field of insurance, there is a lot of data involved- especially concerning clients. It can be hard for agents to keep every bit of data in mind. With the help of data analytics, the insurance company can analyze the client's information and determine how much of an insurance risk they are.  

  1. Education  

Data analysis is important in the field of education. It can help teachers understand what the students need. It can be used in adaptive content, which will help the kids learn faster and better. Data science is the future of education.  

Data science is also used in a lot of other fields such as healthcare, security, military, travel, etc.  

What Types of Data Analytics Do Companies Choose?

Most of the large companies in the world at the moment use data analytics to improve themselves. The first example would be how Spotify uses user data to suggest what music a person would like based on their history and also the history of people who listen to similar music. Netflix also uses a similar mechanism. Amazon uses search data to provide users with personalized ads on every platform. It is time for medium and small companies to start using data science in their businesses as well.  

Out of all the data types in data analytics, companies tend to use predictive and prescriptive analytics the most. They also use descriptive analysis. The one that tends to get overlooked is the diagnostic analysis, but that is a mistake. It is important to understand what caused an anomaly in your numbers if you want to improve your business. That is why a company should always use a balanced system involving all four data types in their business.  


Now you know all the types of data analytics and how they work. If you are interested in learning more about the amazing world of data science, you should check out KnowledgeHut’s Online Big Data Courses that offer you the chance to build a skill-set involving big data tools and also work on practical projects that will help you build a stellar portfolio in data science.  

Frequently Asked Questions (FAQs)

1. What are the 5 types of data analytics? 

There are mainly four types of data analytics, also known as the four pillars of data analytics and they are- Descriptive, Diagnostic, Predictive, and Prescriptive data analytics. But some people also like to add a fifth element to the data analytics list which is known as Cognitive analytics. 

2. What are the 4 steps of data analytics?

The four steps of data analytics are as follows: collecting the data, cleaning the data, analyzing the data, and finally interpreting the results of the analysis.  

3. What are data analytics tools?

Data analytics tools is a term that is used for the applications and software used by data analysts to perform analytical processes better so that companies can benefit from using that data. Some of these tools include- SQL Consoles, Automation tools, Business Intelligence tools, and much more. 


Mounika Narang


Mounika Narang is a project manager having a specialisation in IT project management and Instructional Design. She has an experience of 10 years 
working with Fortune 500 companies to solve their most important development challenges. She lives in Bangalore with her family.