Data Mining Techniques for Successful Business (Tools,Software)

 

Introduction to Data Mining Techniques

The term data mining was first in the 1990s. Before that, statisticians used the term data fishing or data dredging to define analysis of data without and a pre-concluded hypothesis. One of the most important goals of the data mining tools process is to gather conclusive information that could be easily applied to large datasets. Each type of data mining techniques will result in a different result/ effect. This means that recognizing the business problems will go a long way in helping brands to implement the right data mining techniques and thereby get the best results as well. At the same time, it is important to keep in mind that data mining techniques also refers to the discovery of unknown interesting patterns, unusual records or dependencies that were previously undetected.

Big data is one of the most important aspects of the growth story of any brand today, both big and small. In present times, companies are utilizing big data analytics techniques to reach major goals in their companies, both in terms of customer satisfaction and organization growth. At the same time, it is important to understand that comprehending and analyzing big data is important for the successful growth and expansion of an organization. That is why data mining techniques are highly useful as they can help companies to analyze big data in an effective fashion. Though there are multiple data mining techniques available, they cater to different problems and provide insights into that particular subsequent business problems. One of the best ways to gain valuable insights is, therefore, best done through the process of data mining software. A buzzword that is used to describe the entire range of data analytics, data mining techniques includes collection, extraction, analysis and statistical methods. That is why it is important to develop a big strategy in such a manner, that the impact of data mining techniques is clearly understood by the brand/ organization.

8 Important Data Mining Techniques are as follows:

1. Anomaly or Outlier Detection

A data mining technique, anomaly or outlier detection, is a technique that searches for data items in a data set that are similar to a projected pattern or an expected behavior.

Also referred to as outliers, anomalies provide critical and actionable information for brands and organizations. As an outlier is an object that deviates significantly from the general average within a set of database or combination of data.

It is different from the rest of data and that is why outlier data mining tools require additional attention and analysis as it provides a different outlook on a particular issue. This type of data mining technique can be used to detect fraud and risks within a critical system.

They are ideal in a situation where the unique characteristics of the data mining techniques can be analyzed in a proper manner and help the analyst discover any shortcoming in the system.

This, in turn, can indicate fraudulent actions, flawed procedures or areas where a certain theory is invalid, making the process of installing a proper system in place, safe and effective.

It is important to keep in mind that outliers are very common in large data mining techniques. While outliers are not always negative, they can help a brand find unique things that are happening in the data mining techniques sets.

Whatever the case scenario, the findings deduced by anomaly or outlier detection will require further analysis to reach conclusive results.

2. Association Rule Learning

This type of data mining technique is based on the discovery of interesting relations between variables in large databases. This type of data mining technique is used to uncover hidden patterns in the data.

They can be used to identify variables within the data and co-occurrences of different variables that appear with the greatest frequencies. Widely used in retail stores, association rule data mining technique is used for finding patterns in point of sales data.

This data mining tools can be used to recommend new products, especially to find out which type of products people recommend to others or to find out new products to recommend to customers.

A highly useful data mining technique, association rule learning can be used to effectively increase the conversion rate of the brand. A good example of the effectiveness of association learning was implemented by Walmart in 2004.

Through this data mining techniques, it was discovered that Strawberry pop-starts sales increased by seven times prior to a hurricane. Since this finding, Walmart has been placing this product at checkouts prior to a hurricane, thereby creating better sale conversions.

3. Clustering Analysis

This type of data mining technique is Defined as the process of identifying data mining tools that are similar to each other, clustering analysis helps marketers to understand both similarities and differences in data.

As clusters have common traits, they can be used to improve targeting algorithms. For example, if a particular group of customers is buying a particular brand of products, a specific campaign can be created, so as to help the sale of that product.

Understanding this can help brands to effectively increase their sale conversion rates, thereby increasing brand power and engagement. In addition, a creation of personas is also a result of clustering analysis.

Personas are defined as fictional characters that represent different user types within a targeted demographic, attitude that might use a website, brand or product in a similar manner.

As this, an important aspect of clustering analysis, personas help brands make smart marketing choices and create powerful campaigns as well.

4. Classification Analysis

This type of data mining technique has a systematic process for obtaining important and relevant information about metadata (which is data about data) and data, classification analysis helps brands to identify different categories of data mining techniques.

Classification of analysis is closely linked to cluster analysis as they effectively make better choices on data mining tools. Email is a well-known example of classification analysis as it uses algorithms to clarify mails depending on whether they are legitimate or spam.

This is done by using the data mining software on the mail, for example, words and attachments that indicate whether they are spam or legitimate emails.

5. Regression Analysis

Another data mining tools, regression analysis helps brands to define the dependency between variables. This data mining technique is based on the assumption of a one-way causal effect from one variable to the response of another variable.

While independent variables can be affected by each other, dependency is generally not affected both ways as is the case for correlation analysis. A regression analysis can show that one variable is dependent on another, not vice-versa.

As regression analysis is ideal for determining customer satisfaction, it can help brands discover new and different insights about customer loyalty and how external factors that can impact service levels, for example, weather conditions.

A good example of regression analysis is the use of this data mining technique in matching people on dating portals. Many websites use variables to match people according to their likes, interest, and hobbies.

6. Choice Modeling

An accurate and general purpose data mining tools, choice modeling helps brands to make probabilistic predictions about the decision-making behavior of the customers.

As a brand must focus on their target audience, choice modeling helps brands to use their data mining techniques in such a manner, so that they can use their maximum efforts at customers who are likely to make a valid purchase, Choice modeling is used to identify the most important factors that go into helping a customer make their choice.

Based on variables likes places, past purchase, and attitudes, choice modeling helps brands to decide the likelihood of customers making a marketing choice. By investing in choice modeling, brands can easily help to increase their sales in a comprehensive manner.

7. Rule Induction

This type of data mining technique help developing formal rules that are based on a set of observations, rule induction is another data mining tools. The rules extracted from this data mining technique can be used to represent a scientific model of the data mining software or local patterns in the data.

In addition, induction paradigm is the association rule. Association rule is the process of finding out compelling relationships between variables, especially in large databases.

A technique used in data mining software, it helps brands to discover regularities between certain products. For example, if a customer buys butter, there are chances that they would buy bread as well.

The main focus of association rule is to understand that if a customer is performing a specific function, say A the likelihood of them performing function B is high as well.

This understanding can help brands to not just forecast sales but also create smart marketing solutions that include promotional pricing and better product placements in shops and malls.

8. Neural Networks

A formative stage in the process of data mining technology, neural networks have its own sets of benefits and advantages. The biggest advantage of a neural network is that it creates highly accurate predictive models that can be applied to a large number of problems in an effective manner.

There are two types of network namely neural and artificial. True neural networks are biological, namely, the human brains which is able to make patterns and predictions.

In the process, it makes the choices regarding the situation. The artificial ones are those programs that are implemented on the computer systems.

Artificial neural networks derive their name from the historical development in which scientists tried to get the computer software to think in the manner of the human brain.

Though the brain is a much more complex thing, neural networks can perform a lot of tasks that the human brain can as well.

It is difficult to say when neural networks were employed for data mining tools but a piece of a study of this data mining technique was discovered during the second world war.

Since then, a neural network has come a long way and many data analysts have been using it to solve real-world prediction problems and in the general improve the results of algorithms as well.

Further, many of the biggest breakthroughs in neural networks have been in the application of problems like improving customer prediction or fraud detection, meaning that they can help brands to discover newer and better methods of connecting with customers.

In fact, neural networks have successfully helped brands and organizations to deal with a lot of problems like detecting fraud use of credit cards.

They have also been applied in areas like military for automated driving of unmanned vehicles to correct pronunciation of English words from the written text.

Clearly, one of the hardest things for a brand to do is to decide which data mining technique might be the right choice.

This is because the best data mining technique to be used is depended on the type of problems faced by the brand, which they want to resolve by using data mining technique.

Sometimes a trial and error will help a brand resolve this issue in a better manner. That being said, it is also a reality that the markets, customers are constantly changing and completely dynamic in nature.

These dynamics have ensured that there can be no perfect data mining technique because it is close to impossible to predict the future in a successful manner.

That is why data mining techniques are important because it can help scientists and organizations to use relevant data mining software and adapt to this changing environment and economy in a much better manner.

This can help to create models that will help anticipate a change in a much focused and enhanced manner, because the more models that are there for data mining techniques, the more business value can be created for the brand.

Overall data mining techniques are helping brands understand data mining tools in a much more scientific and systematic manner, thereby empowering and ensuring better brand connect on one hand and a better growth story on the other hand.

Recommended Courses

This has been a guide to Data mining techniques, here we have discussed the 8 important data mining techniques that can take your business ahead in a comprehensive and successful manner. You may also have a look the following courses to learn Data mining –

1. Data Mining Concepts and Techniques
2. Data Mining Process
3. Data Mining Concepts and Techniques
4. Data Mining Applications