Data mining is the process of sorting through large data sets to identify patterns and establish relationships to solve problems through data analysis. Data mining tools allow enterprises to predict future trends.In data mining, association rules are created by analyzing data for frequent if/then patterns, then using the support and confidence criteria to locate the most important relationships within the data. Support is how frequently the items appear in the database, while confidence is the number of times if/then statements are accurate. Other data mining parameters include Sequence or Path Analysis, Classification, Clustering and Forecasting.
Sequence or Path Analysis parameters look for patterns where one event leads to another later event. A Sequence is an ordered list of sets of items, and it is a common type of data structure found in many databases. A Classification parameter looks for new patterns, and might result in a change in the way the data is organized. Classification algorithms predict variables based on other factors within the database.
One of the most basic techniques in data mining is learning to recognize patterns in your data sets. This is usually a recognition of some aberration in your data happening at regular intervals, or an ebb and flow of a certain variable over time. For example, you might see that your sales of a certain product seem to spike just before the holidays, or notice that warmer weather drives more people to your website.
Classification is a more complex data mining technique that forces you to collect various attributes together into discernable categories, which you can then use to draw further conclusions, or serve some function. For example, if you’re evaluating data on individual customers’ financial backgrounds and purchase histories, you might be able to classify them as “low,” “medium,” or “high” credit risks. You could then use these classifications to learn even more about those customers.
Association is related to tracking patterns, but is more specific to dependently linked variables. In this case, you’ll look for specific events or attributes that are highly correlated with another event or attribute; for example, you might notice that when your customers buy a specific item, they also often buy a second, related item. This is usually what’s used to populate “people also bought” sections of online stores.
In many cases, simply recognizing the overarching pattern can’t give you a clear understanding of your data set. You also need to be able to identify anomalies, or outliers in your data. For example, if your purchasers are almost exclusively male, but during one strange week in July, there’s a huge spike in female purchasers, you’ll want to investigate the spike and see what drove it, so you can either replicate it or better understand your audience in the process.
Clustering is very similar to classification, but involves grouping chunks of data together based on their similarities. For example, you might choose to cluster different demographics of your audience into different packets based on how much disposable income they have, or how often they tend to shop at your store.
Regression, used primarily as a form of planning and modeling, is used to identify the likelihood of a certain variable, given the presence of other variables. For example, you could use it to project a certain price, based on other factors like availability, consumer demand, and competition. More specifically, regression’s main focus is to help you uncover the exact relationship between two (or more) variables in a given data set.
Prediction is one of the most valuable data mining techniques, since it’s used to project the types of data you’ll see in the future. In many cases, just recognizing and understanding historical trends is enough to chart a somewhat accurate prediction of what will happen in the future. For example, you might review consumers’ credit histories and past purchases to predict whether they’ll be a credit risk in the future.
Data Mining Tools:
1. Rapid Miner:
Rapid Miner is a data science software platform that provides an integrated environment for data preparation, machine learning, deep learning, text mining and predictive analysis. It is one of the apex leading open source system for data mining. The program is written entirely in Java programming language. The program provides an option to try around with a huge number of arbitrarily nestable operators which are detailed in XML files and are made with graphical user interference of rapid miner.
2. Oracle Data Mining:
It is a representative of the Oracle’s Advanced Analytics Database. Market leading companies use it to maximize the potential of their data to make accurate predictions. The system works with a powerful data algorithm to target best customers. Also, it identifies both anomalies and cross-selling opportunities and enables users to apply a different predictive model based on their need. Further, it customizes customer profiles in the desired way.
3. IBM SPSS Modeler:
When it comes to large-scale projects IBM SPSS Modeler turns out to be the best fit. In this modeler, text analytics and its state-of-the-art visual interface prove to be extremely valuable. It helps to generate data mining algorithms with minimal or no programming. It can be widely used in anomaly detection, Bayesian networks, CARMA, Cox regression and basic neural networks that use multilayer perceptron with back-propagation learning.
Available as a free and open source language, Python is most often compared to R for ease of use. Unlike R, Python’s learning curve tends to be so short that it becomes easy to use. Many users find that they can start building datasets and doing extremely complex affinity analysis in minutes. The most common business-use case-data visualizations are straightforward as long as you are comfortable with basic programming concepts like variables, data types, functions, conditionals and loops.
Orange is an open source data visualization, machine learning and data mining toolkit. It features a visual programming front-end for exploratory data analysis and interactive data visualization. Orange is a component-based visual programming software package for data visualization, machine learning, data mining and data analysis. Orange components are called widgets and they range from simple data visualization, subset selection and pre-processing, to evaluation of learning algorithms and predictive modeling. Visual programming in orange is performed through an interface in which workflows are created by linking predefined or user-designed widgets, while advanced users can use Orange as a Python library for data manipulation and widget alteration.
Advantages Of Data Mining:
1. Marketing / Retail:
Data mining helps marketing companies build models based on historical data to predict who will respond to the new marketing campaigns such as direct mail, online marketing campaign…etc. Through the results, marketers will have an appropriate approach to selling profitable products to targeted customers.Data mining brings a lot of benefits to retail companies in the same way as marketing. Through market basket analysis, a store can have an appropriate production arrangement in a way that customers can buy frequent buying products together with pleasant. In addition, it also helps the retail companies offer certain discounts for particular products that will attract more customers.
2. Finance / Banking:
Data mining gives financial institutions information about loan information and credit reporting. By building a model from historical customer’s data, the bank, and financial institution can determine good and bad loans. In addition, data mining helps banks detect fraudulent credit card transactions to protect credit card’s owner.
By applying data mining in operational engineering data, manufacturers can detect faulty equipment and determine optimal control parameters. For example, semiconductor manufacturers have a challenge that even the conditions of manufacturing environments at different wafer production plants are similar, the quality of wafer are a lot the same and some for unknown reasons even has defects. Data mining has been applying to determine the ranges of control parameters that lead to the production of the golden wafer. Then those optimal control parameters are used to manufacture wafers with desired quality.
Data mining helps government agency by digging and analyzing records of the financial transaction to build patterns that can detect money laundering or criminal activities.
Disadvantages Of Data Mining:
1. Privacy Issues:
The concerns about the personal privacy have been increasing enormously recently especially when the internet is booming with social networks, e-commerce, forums, blogs…. Because of privacy issues, people are afraid of their personal information is collected and used in an unethical way that potentially causing them a lot of troubles. Businesses collect information about their customers in many ways for understanding their purchasing behaviors trends. However businesses don’t last forever, some days they may be acquired by other or gone. At this time, the personal information they own probably is sold to other or leak.
2. Security Issues:
Security is a big issue. Businesses own information about their employees and customers including social security number, birthday, payroll and etc. However how properly this information is taken care is still in questions. There have been a lot of cases that hackers accessed and stole big data of customers from the big corporation such as Ford Motor Credit Company, Sony… with so much personal and financial information available, the credit card stolen and identity theft become a big problem.
3. Misuse Of Information/Inaccurate Information:
Information is collected through data mining intended for the ethical purposes can be misused. This information may be exploited by unethical people or businesses to take benefits of vulnerable people or discriminate against a group of people. In addition, is not perfectly accurate. Therefore, if inaccurate information is used for decision-making, it will cause serious consequence.