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Data Mining

Definition

Data mining is the process of discovering patterns in large data sets involving methods at the intersection of machine learning, statistics, and database systems.

What is 'Data Mining'

Data mining is a process used by companies to turn raw data into useful information. By using software to look for patterns in large batches of data, businesses can learn more about their customers and develop more effective marketing strategies as well as increase sales and decrease costs. Data mining depends on effective data collection and warehousing as well as computer processing.

Explaining 'Data Mining'

Grocery stores are well-known users of data mining techniques. Many supermarkets offer free loyalty cards to customers that give them access to reduced prices not available to non-members. The cards make it easy for stores to track who is buying what, when they are buying it and at what price. The stores can then use this data, after analyzing it, for multiple purposes, such as offering customers coupons targeted to their buying habits and deciding when to put items on sale or when to sell them at full price. Data mining can be a cause for concern when only selected information, which is not representative of the overall sample group, is used to prove a certain hypothesis.

Data Warehousing

When companies centralize their data into one database or program, it is called data warehousing. With a data warehouse, an organization may spin off segments of the data for specific users to analyze and utilize. However, in other cases, analysts may start with the type of data they want and create a data warehouse based on those specs. Regardless of how businesses and other entities organize their data, they use it to support management's decision-making processes.

Data Mining Software

Data mining programs analyze relationships and patterns in data based on what users request. For example, data mining software can be used to create classes of information. To illustrate, imagine a restaurant wants to use data mining to determine when they should offer certain specials. It looks at the information it has collected and creates classes based on when customers visit and what they order.

Data Mining Process

The data mining process breaks down into five steps. First, organizations collect data and load it into their data warehouses. Next, 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. Then, application software sorts the data based on the user's results, and finally, the end user presents the data in an easy-to-share format, such as a graph or table.


Further Reading


Data mining in economics, finance, and marketing
link.springer.com [PDF]
Data Mining has become a buzzword in industry in recent years. It is something that everyone is talking about but few seem to understand. There are two reasons for this lack of understanding: First is the fact that Data Mining researchers have very diverse backgrounds …

Perception-based approach to time series data miningPerception-based approach to time series data mining
www.sciencedirect.com [PDF]
Data Mining has become a buzzword in industry in recent years. It is something that everyone is talking about but few seem to understand. There are two reasons for this lack of understanding: First is the fact that Data Mining researchers have very diverse backgrounds …

An empirical comparison of published replication research in accounting, economics, finance, management, and marketingAn empirical comparison of published replication research in accounting, economics, finance, management, and marketing
www.sciencedirect.com [PDF]
Data Mining has become a buzzword in industry in recent years. It is something that everyone is talking about but few seem to understand. There are two reasons for this lack of understanding: First is the fact that Data Mining researchers have very diverse backgrounds …

Data mining for financial decision making.Data mining for financial decision making.
psycnet.apa.org [PDF]
Data Mining has become a buzzword in industry in recent years. It is something that everyone is talking about but few seem to understand. There are two reasons for this lack of understanding: First is the fact that Data Mining researchers have very diverse backgrounds …

Spurious regressions in financial economics?Spurious regressions in financial economics?
onlinelibrary.wiley.com [PDF]
Data Mining has become a buzzword in industry in recent years. It is something that everyone is talking about but few seem to understand. There are two reasons for this lack of understanding: First is the fact that Data Mining researchers have very diverse backgrounds …

The application of data mining techniques in financial fraud detection: A classification framework and an academic review of literatureThe application of data mining techniques in financial fraud detection: A classification framework and an academic review of literature
www.sciencedirect.com [PDF]
Data Mining has become a buzzword in industry in recent years. It is something that everyone is talking about but few seem to understand. There are two reasons for this lack of understanding: First is the fact that Data Mining researchers have very diverse backgrounds …

A new wavelet-based denoising algorithm for high-frequency financial data miningA new wavelet-based denoising algorithm for high-frequency financial data mining
www.sciencedirect.com [PDF]
Data Mining has become a buzzword in industry in recent years. It is something that everyone is talking about but few seem to understand. There are two reasons for this lack of understanding: First is the fact that Data Mining researchers have very diverse backgrounds …

Informatics, data mining, econometrics and financial economics: A connectionInformatics, data mining, econometrics and financial economics: A connection
repub.eur.nl [PDF]
Data Mining has become a buzzword in industry in recent years. It is something that everyone is talking about but few seem to understand. There are two reasons for this lack of understanding: First is the fact that Data Mining researchers have very diverse backgrounds …



FAQ


What is data mining?

Data mining is the process of discovering patterns in large data sets.

What does the term "oracle" refer to?

An oracle is a device that provides answers to questions.

When was data mining first used?

Data mining has been used since the 1960s, with the availability of oracles for certain combinatorial games (e.g., for 3x3-chess) with any beginning configuration, small-board dots-and-boxes, small-board hex, and certain endgames in chess, dots-and-boxes, and hex; a new area for data mining has been opened. This is the extraction of human usable strategies from these oracles. Current pattern recognition approaches do not seem to fully acquire the high level of abstraction required to be applied successfully. Instead extensive experimentation with tablebases combined with an intensive study of tablebase answers to well designed problems and knowledge of prior art (i.e., pretablebase knowledge) are used to yield insightful patterns. Berlekamp (in dots-and-boxes etc.) and John Nunn (in chess endgames) are notable examples of researchers doing this work though they were not involved in tablebase generation.

How can business use data mining?

Businesses can use data mining for analysis purposes such as determining trends within their organization's sales records over time or analyzing customer purchasing habits based on location information gathered through credit cards purchases made by customers at different stores throughout a given period of time using geographic information systems software programs such as ArcGIS .

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