Data mining or knowledge discovery is the process of analyzing large amounts of data from many sources then summarizing that information into a useable format to make informed decisions. Using the software to perform analysis and using analytical tools allows us to see data from many different angels. In addition, we can see patterns and/or correlations with other large relational databases. This ability to see the behavior of our customers helps companies develop strategies for the selling of existing and future products. In this paper, we explorer benefits to the business, associations of products, intelligence of our customers, clustering of information, validity of data mining algorithms, and security.
Determine the benefits of data mining to the businesses when employing predictive analytics to understand the behavior of customers.
In order to maintain a competitive edge in the economy, it is good to know what your customer wants. Why spend time developing, marketing, and selling a product that no one really needs nor wants. Using advanced algorithms in data mining, we can predict what our customers want and need. When data mining is used, the benefits not only apply to businesses but also weather forecasting, root cause analysis, medicine, and many other facets of life. Specifically when looking at the benefits to the business Marketing and Retail benefit highly from using Data Mining. In marketing, valid predictions are made as to the reaction of new sales campaigns and in Retail, companies can offer discounts for particular items.
Determine the benefits of data mining to the businesses when employing associations’ discovery in products sold to customers.
The function of association analysis is to find patterns in processes such as a customer who buys steak also buys potatoes. Association Analysis uses historical data to generate a working model. When using the market-basket analysis, the application of association modeling, marketing campaigns created surrounded by the idea if you buy the item “A” at full cost you can also get item “B” at a reduced cost benefits a business in attracting new customers. Another example would be 85% of the time when a customer purchases cereal they also buy milk. How many times have you ventured into an unknown store looking for a group of items that normally would take about 5 min at your regular store but took 30 min because items are not collocated? Using this idea a retail store can adjust the location of products to be closer together so a visitor to the store has a better customer experience and may return and or tell others.
Determine the benefits of data mining to the businesses when employing Web mining to discover business intelligence from Web customers. Web data mining produces intelligence by analyzing structured and unstructured web data sources. Using the information gathered websites such as www.shopnational.com show other items you may also like dependent on what your selection is. So as seen in the example this can increase profits as a customer is on the website and buys more than what they first came for. Furthermore, the information gathered from web mining can create specific customer profiles that can lead to marketing that is more efficient. A business can offer a more personalized service to the customer as well as find new potential customers.
Determine the benefits of data mining to the businesses when employing clustering to find related customer information. Clustering is a group of objects derived from the data mined information. It is an attempt to group together dissimilar objects in a single group. For example, taking the whole data and separating out just Males regardless of what purchase made. Marketing uses this form of data mining to determine their customer base and for characterization based on purchasing patterns. Clustering technique’s benefits business by