Data Mining: Use Cases, Benefits, and Tools
In this article, you will learn about the main use cases of data mining and how it has opened up a world of possibilities for businesses.
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In the last decade, advances in processing power and speed have allowed us to move from tedious and time-consuming manual practices to fast and easy automated data analysis. The more complex the data sets collected, the greater the potential to uncover relevant information. Retailers, banks, manufacturers, healthcare companies, etc., are using data mining to uncover the relationships between everything from price optimization, promotions, and demographics to how economics, risk, competition, and online presence affect their business models, revenues, operations, and customer relationships. Today, data scientists have become indispensable to organizations around the world as companies seek to achieve bigger goals than ever before with data science. In this article, you will learn about the main use cases of data mining and how it has opened up a world of possibilities for businesses.
Today, organizations have access to more data than ever before. However, making sense of the huge volumes of structured and unstructured data to implement improvements across the organization can be extremely difficult due to the sheer volume of information.
What is Data Mining
Data mining is the process of analyzing massive volumes of data to discover business intelligence that helps companies solve problems, mitigate risks, and seize new opportunities.
Data mining, also called knowledge discovery in databases, in computer science, the process of discovering interesting and useful patterns and relationships in large volumes of data. The field combines tools from statistics and artificial intelligence with database management to analyze large digital collections, known as data sets. Data mining is widely used in business, scientific research, and government security. It is the process of finding anomalies, patterns, and correlations within large data sets to predict outcomes. It is a process used by companies to turn raw data into useful information.
Steps of the Data Mining Process
- Organizations collect data and load it into their data warehouses.
- They store and manage the data, either on in-house servers or the cloud.
- Business analysts, management teams, and information technology professionals access the data and determine how they want to organize it.
- Application software sorts the data based on the user’s results.
- The end-user presents the data in an easy-to-share format, such as a graph or table.
Data mining practitioners typically achieve timely, reliable results by following a structured, repeatable process that involves these six steps:
- Business Understanding
Developing a thorough understanding of the project parameters, including the current business situation, the primary business objective of the project, and the criteria for success.
- Data Understanding
Determining the data that will be needed to solve the problem and gathering it from all available sources.
- Data Preparation
Preparing the data in the appropriate format to answer the business question, fixing any data quality problems such as missing or duplicate data.
Using algorithms to identify patterns within the data.
Determining whether and how well the results delivered by a given model will help achieve the business goal. There is often an iterative phase to find the best algorithm in order to achieve the best result.
Making the results of the project available to decision-makers.
Data Mining Techniques
There are many data mining techniques that organizations can use to turn raw data into actionable insights. These techniques range from advanced AI to the fundamentals of data preparation, which are essential to maximizing the value of data investments:
1. Pattern Tracking
Pattern tracking is a fundamental technique of data mining. It is about identifying and monitoring trends or patterns in data to make intelligent inferences about business outcomes. When an organization identifies a trend in sales data, for example, it has a basis for taking action to leverage that information. If it is determined that a certain product sells better than others for a particular demographic, an organization can use this knowledge to create similar products or services, or simply stock the original product better for that demographic.
2. Data Cleaning and Preparation
Data cleaning and preparation is an essential part of the data mining process. Raw data must be cleaned and formatted to be useful for the various analysis methods. Data cleaning and preparation includes various elements of data modeling, transformation, migration, integration, and aggregation. It is a necessary step in understanding the basic characteristics and attributes of the data to determine its best use.
Classification-based data mining techniques involve analyzing the various attributes associated with different types of data. Once organizations have identified the key characteristics of these data types, they can categorize or classify the corresponding data. This is essential for identifying, for example, personally identifiable information that organizations may wish to protect or delete from records.
4. Outlier Detection
Outlier detection identifies anomalies in data sets. Once organizations have found outliers in their data, it is easier to understand why these anomalies occur and to prepare for any future occurrences to better meet business objectives. For example, if there is a spike in the use of transactional credit card systems at a certain time of day, organizations can leverage this information by discovering the reason for the spike to optimize their sales for the rest of the day.
Association is a data mining technique related to statistics. It indicates that certain data is related to other data or data-driven events. It is similar to the notion of co-occurrence in machine learning, where the probability of one data-based event is indicated by the presence of another. This means that data analysis shows that there is a relationship between two data events: for example, the fact that purchase of hamburgers is frequently accompanied by the purchase of Chips.
Clustering is an analysis technique that relies on visual approaches to understanding data. Clustering mechanisms use graphs to show where the distribution of data is with respect to different types of metrics. Clustering techniques also use different colors to show the distribution of data. Graphical approaches are ideal for using cluster analysis. With graphs and clustering, in particular, users can visually see how data is distributed to identify trends that are relevant to their business objectives.
Regression techniques are useful for identifying the nature of the relationship between variables in a data set. These relationships may be causal in some cases, or simply correlated in others. Regression is a simple white box technique that clearly reveals the relationship between variables. Regression techniques are used in some aspects of forecasting and data modeling.
8. Sequential Patterns
This data mining technique focuses on finding a series of events that occur in sequence. It is particularly useful for transactional data mining. For example, this technique can reveal which items of clothing customers are most likely to buy after an initial purchase of, say, a pair of shoes. Understanding sequential patterns can help organizations to recommend additional items to customers to boost sales.
Prediction is a very powerful aspect of data mining and is one of the four branches of analytics. Predictive analytics uses patterns found in current or historical data to extend them into the future. In this way, it gives organizations insight into trends that will occur in their data in the future. There are several different approaches to using predictive analytics. Some of the more advanced ones involve aspects of machine learning and artificial intelligence. However, predictive analytics does not necessarily rely on these techniques, but can also be facilitated by simpler algorithms.
10. Decision Trees
Decision trees are a specific type of predictive model that allows organizations to efficiently extract data. Technically, a decision tree is part of machine learning, but it is better known as a “white box” machine learning technique due to its extremely simple nature.
A decision tree allows users to clearly understand how data inputs affect outcomes. When multiple decision tree models are combined, they create predictive analytics models known as random forest. Complicated random forest models are considered “black box” machine learning techniques because it is not always easy to understand their results based on their inputs. However, in most cases, this basic form of ensemble modeling is more accurate than using decision trees alone.
11. Neural Networks
A neural network is a specific type of machine learning model that is often used with AI and deep learning. So-called because they have different layers that resemble the functioning of neurons in the human brain, neural networks are one of the most accurate machine learning models used today.
Data visualizations are another important part of data mining. They offer users a view of data based on sensory perceptions that people can see. Today’s data visualizations are dynamic, useful for real-time data streaming, and are characterized by different colors that reveal different trends and patterns in the data. Dashboards are a powerful way to use data visualizations to uncover information about data operations. Organizations can base dashboards on different metrics and use visualizations to highlight patterns in the data, rather than simply using numerical results from statistical models.
13. Statistical Techniques
Statistical techniques are at the heart of most analyses involved in the data mining process. Different analysis models are based on statistical concepts, which produce numerical values applicable to specific business objectives. For example, neural networks use complex statistics based on different weights and measures to determine whether an image is a dog or a cat in image recognition systems.
14. Long-term Memory Processing
Long-term memory processing refers to the ability to analyse data over long periods. Historical data stored in data warehouses are useful for this purpose. When an organisation can analyse over a long period of time, it is able to identify patterns that would otherwise be too subtle to detect. For example, by analysing attrition over a period of several years, an organisation can find subtle clues that could lead to a reduction in attrition in finance.
15. Data Warehousing
Data warehousing is an important part of the data mining process. Traditionally, data warehousing was about storing structured data in relational database management systems so that it could be analyzed for business intelligence, reporting, and basic dashboards. Today, there are cloud-based data warehouses and semi-structured and unstructured data warehouses such as Hadoop. While data warehouses were traditionally used for historical data, many modern approaches can provide deep analysis of data in real-time.
16. Machine Learning and Artificial Intelligence
Machine learning and artificial intelligence (AI) represent some of the most advanced developments in the field of data mining. Advanced forms of machine learning, such as deep learning, offer highly accurate predictions when working with large-scale data. They are therefore useful for data processing in AI implementations such as computer vision, speech recognition or sophisticated text analysis using natural language processing. These data mining techniques help to determine the value of semi-structured and unstructured data.
Why Is Data Mining Important?
Data mining allows you to:
- Sift through all the chaotic and repetitive noise in your data.
- Understand what is relevant and then make good use of that information to assess likely outcomes.
- Accelerate the pace of making informed decisions.
Benefits of Data Mining
- Data mining helps companies to get knowledge-based information.
- It can be implemented in new systems as well as existing platforms
- Data mining helps organizations to make profitable adjustments in operation and production.
- Facilitates automated prediction of trends and behaviors as well as the automated discovery of hidden patterns.
- Data mining is a cost-effective and efficient solution compared to other statistical data applications.
- Data mining helps with the decision-making process.
- It is a speedy process that makes it easy for the users to analyze a huge amount of data in less time.
Data Mining Use Cases and Examples
The predictive capacity of data mining has changed the design of business strategies. Now, you can understand the present to anticipate the future. These are some uses cases and examples of data mining in the current industry:
Data mining is used to explore increasingly large databases and to improve market segmentation. By analyzing the relationships between parameters such as customer age, gender, tastes, etc., it is possible to guess their behavior in order to direct personalized loyalty campaigns. Data mining in marketing also predicts which users are likely to unsubscribe from a service, what interests them based on their searches, or what a mailing list should include to achieve a higher response rate.
Banks use data mining to better understand market risks. It is commonly applied to credit ratings and to intelligent anti-fraud systems to analyze transactions, card transactions, purchasing patterns, and customer financial data. Data mining also allows banks to learn more about our online preferences or habits to optimize the return on their marketing campaigns, study the performance of sales channels or manage regulatory compliance obligations.
Data mining benefits educators to access student data, predict achievement levels and find students or groups of students which need extra attention. For example, students who are weak in maths subject.
E-commerce websites use Data Mining to offer cross-sells and up-sells through their websites. One of the most famous names is Amazon, which uses Data mining techniques to get more customers into their eCommerce store.
Supermarkets, for example, use joint purchasing patterns to identify product associations and decide how to place them in the aisles and on the shelves. Data mining also detects which offers are most valued by customers or increase sales at the checkout queue.
Service providers like mobile phones and utility industries use Data Mining to predict the reasons when a customer leaves their company. They analyze billing details, customer service interactions, complaints made to the company to assign each customer a probability score and offer incentives.
Data mining enables more accurate diagnostics. Having all of the patient’s information, such as medical records, physical examinations, and treatment patterns, allows more effective treatments to be prescribed. It also enables more effective, efficient and cost-effective management of health resources by identifying risks, predicting illnesses in certain segments of the population or forecasting the length of hospital admission. Detecting fraud and irregularities, and strengthening ties with patients with an enhanced knowledge of their needs are also advantages of using data mining in medicine.
Data mining helps insurance companies to price their products profitable and promote new offers to their new or existing customers.
With the help of Data Mining, Manufacturers can predict the wear and tear of production assets. They can anticipate maintenance which helps them reduce them to minimize downtime.
Data Mining helps crime investigation agencies to deploy the police workforce (where is a crime most likely to happen and when?), who to search at a border crossing etc.
Television and Radio
There are networks that apply real-time data mining to measure their online television (IPTV) and radio audiences. These systems collect and analyze, on the fly, anonymous information from channel views, broadcasts, and programming. Data mining allows networks to make personalized recommendations to radio listeners and TV viewers, as well as get to know their interests and activities in real-time and better understand their behavior. Networks also gain valuable knowledge for their advertisers, who use this data to target their potential customers more accurately.
Organizations Across Industries Are Achieving Results from Data Mining:
- Bayer Helps Farmers With Sustainable Food Production
Weeds that damage crops have been a problem for farmers since farming began. A proper solution is to apply a narrow spectrum herbicide that effectively kills the exact species of weed in the field while having as few undesirable side effects as possible. But to do that, farmers first need to accurately identify the weeds in their fields. Using Talend Real-time Big Data, Bayer Digital Farming developed WEEDSCOUT, a new application farmers can download free. The app uses machine learning and artificial intelligence to match photos of weeds in a Bayer database with weed photos farmers send in. It gives the grower the opportunity to more precisely predict the impact of his or her actions such as choice of seed variety, the application rate of crop protection products, or harvest timing.
- Air France KLM Caters to Customer Travel Preferences
The airline uses data mining techniques to create a 360-degree customer view by integrating data from trip searches, bookings, and flight operations with web, social media, call center, and airport lounge interactions. They use this deep customer insight to create personalized travel experiences.
- Groupon Aligns Marketing Activities
One of Groupon’s key challenges is processing the massive volume of data it uses to provide its shopping service. Every day, the company processes more than a terabyte of raw data in real time and stores this information in various database systems. Data mining allows Groupon to align marketing activities more closely with customer preferences, analyzing 1 terabyte of customer data in real time and helping the company identify trends as they emerge.
- Domino’s Helps Customers Build the Perfect Pizza
The largest pizza company in the world collects 85,000 structured and unstructured data sources, including point of sales systems and 26 supply chain centers, and through all its channels, including text messages, social media, and Amazon Echo. This level of insight has improved business performance while enabling one-to-one buying experiences across touchpoints.
You can use data mining to solve almost any business problem that involves data, including:
- Increasing revenue.
- Understanding customer segments and preferences.
- Acquiring new customers.
- Improving cross-selling and up-selling.
- Retaining customers and increasing loyalty.
- Increasing ROI from marketing campaigns.
- Detecting fraud.
- Identifying credit risks.
- Monitoring operational performance.
10 Data Mining Tools
Organizations can get started with data mining by accessing the necessary tools. Because the data mining process starts right after data ingestion, it’s critical to find data preparation tools that support different data structures necessary for data mining analytics. Organizations will also want to classify data in order to explore it with the numerous techniques discussed above.
Oracle Data Mining popularly known as ODM is a module of the Oracle Advanced Analytics Database. This Data mining tool allows data analysts to generate detailed insights and make predictions. It helps predict customer behavior, develops customer profiles, identifies cross-selling opportunities.
2. Rapid Miner
Rapid Miner is one of the best predictive analysis systems, it is written in the Java programming language. It provides an integrated environment for deep learning, text mining, machine learning, and predictive analysis. It offers a range of products to build new data mining processes and predictive setup analysis.
It is a perfect software suite for machine learning and data mining. It best aids data visualization and is a component-based software. The components of Orange are called “widgets.” These widgets range from preprocessing and data visualization to the assessment of algorithms and predictive modeling. Widgets deliver significant functionalities such as:
displaying data table and allowing selection of features, data reading, training predictors and comparison of learning algorithms, data element visualization, etc.
Weka has a GUI that facilitates easy access to all its features. It is written in the Java programming language. Weka is an open-source machine learning software with a vast collection of algorithms for data mining. It supports different data mining tasks, like preprocessing, classification, regression, clustering, and visualization, in a graphical interface that makes it easy to use. For each of these tasks, Weka provides built-in machine learning algorithms which allow you to quickly test your ideas and deploy models without writing any code.
It is the best integration platform for data analytics and reporting developed by KNIME.com AG. It operates on the concept of the modular data pipeline. KNIME constitutes various machine learning and data mining components embedded together. It is a free, open-source platform for data mining and machine learning. Its intuitive interface allows you to create end-to-end data science workflows, from modeling to production. And different pre-built components enable fast modeling without entering a single line of code. A set of powerful extensions and integrations make KNIME a versatile and scalable platform to process complex types of data and use advanced algorithms. With KNIME, data scientists can create applications and services for analytics or business intelligence. In the financial industry, for instance, common use cases include credit scoring, fraud detection, and credit risk assessment.
Sisense is another effective Data mining tool. Sisense is extremely useful and best suited BI software when it comes to reporting purposes within the organization. It has a brilliant capability to handle and process data for small-scale/large-scale organizations. It instantly analyzes and visualizes both big and disparate datasets. It is an ideal tool for creating dashboards with a wide variety of visualizations. It allows combining data from various sources to build a common repository and further, refines data to generate rich reports that get shared across departments for reporting. Sisense generates reports which are highly visual. It is specially designed for users that are non-technical. It allows drag and drop facility as well as widgets. Different widgets can be selected to generate the reports in form of pie charts, line charts, bar graphs, etc. based on the purpose of an organization. Reports can be further drilled down by simply clicking to check details and comprehensive data.
Dundas is another excellent dashboard, reporting, and data analytics tool. Dundas is quite reliable with its rapid integrations and quick insights. It provides unlimited data transformation patterns with attractive tables, charts, and graphs. Dundas BI puts data in well-defined structures in a specific manner in order to ease the processing for the user. It constitutes relational methods that facilitate multi-dimensional analysis and focuses on business-critical matters. As it generates reliable reports, thus it reduces cost and eliminates the requirement of other additional software.
Intetsoft is an analytics dashboard and reporting tool that provides iterative development of data reports/views and generates pixel-perfect reports. It allows the quick and flexible transformation of data from various sources.
Qlik is a data mining and visualization tool. It also offers dashboards and supports multiple data sources and file types. It has the following features: drag-and-drop interfaces to create flexible, interactive data visualizations, instantly respond to interactions and changes, supports multiple data sources and file types, allows easy security for data and content across all devices, allows you to share relevant analyses, including apps and stories, using a centralized hub.
MonkeyLearn is a machine learning platform that specializes in text mining. Available in a user-friendly interface, you can easily integrate MonkeyLearn with your existing tools to perform data mining in real-time. Start immediately with pre-trained text mining models like this sentiment analyzer, below, or build a customized solution to cater to more specific business needs. MonkeyLearn supports various data mining tasks, from detecting topics, sentiment, and intent, to extracting keywords and named entities.MonkeyLearn’s text mining tools are already being used to automate ticket tagging and routing in customer support, automatically detect negative feedback in social media, and deliver fine-grained insights that lead to better decision making.
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Published at DZone with permission of Ekaterina Novoseltseva. See the original article here.
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