There is enormous data in this world, and the extent to which it is increasing exponentially is insane. There’s possibly no field, no sector, no industry in this whole wide world that doesn’t make use of data. But, this data is worthless unless it is processed so that it is possible to obtain meaningful conclusions out of it and paves the way for decision making. It is nothing but what is called data mining. In other words, it is the process of converting raw data into useful information.
Why is it important?
As mining data involves filtering to obtain the most useful information, it uses this information that the companies can get to know their customers better. With this, they can now develop more effective marketing strategies and increase sales. Not just this, it is also possible for them to decrease their costs. Hence, a win-win situation for everyone.
Steps in data mining
Mining data mainly involves five steps.
- The first step involves collecting relevant data wherever possible and loading it in the data warehouses.
- This is followed by storing and managing data. It is done in either of the two ways – using either in-house servers or the cloud.
- The next step involves Business analysts, management teams, and information technology professionals. These people with the required expertise access the data and determine how they would want to organize it.
- It is now time to sort the data. It is done using specific application software.
- Lastly, the results obtained are presented in the desired format, like graphs, tables, etc.
Applications of Data mining:
E-commerce is one of those areas that has garnered attention from every corner of the world. Most of us have shopped online at least once. Ever wondered what makes websites like Amazon, Flipkart, etc., come up with ‘Frequently bought together’, ‘People also viewed’, etc.? To your surprise, these recommendations by the websites result from data mining that revolves around purchasing history of the website’s customers. Simply put, these e-commerce platforms obtain a lot of data about their customers and accordingly come up with recommendations, thereby increasing their sales.
Customer Relationship Management
For any business/company or an organization, the most significant asset has to be the customers. It makes Customer Relationship Management all the more critical. Steps in acquiring and retaining customers, improving customers’ loyalty, and implementing customer-focused strategies ultimately talk volumes about how the business is. Companies try every possible way to maintain a proper and healthy relationship with customers. It is for this reason that the business needs to collect data and analyze the information. Now, this is precisely where data mining comes into the picture.
The number of crimes happening across the world is alarming. It calls for a system that aids in preventing crimes, at least to some extent. No doubt, the data regarding all the crimes that have happened so far is recorded. Mining this data can enable one to study the patterns and trends and predict future events with better accuracy. In addition to this, it is also possible to determine which area is more prone to crime, deploy the police personnel, which age group to target, which vehicle numbers to scrutinize, and a lot more.
The banking sector is one of the most critical pillars in building the economy, without a doubt. Also, the amount of data that this sector has to deal with needs no special mention. With mining, it is possible to identify patterns, market risks, and other correlations. The information so obtained can help the managers make the best possible decisions that benefit them and the customers.
Areas such as segmentation, targeting, acquisition, management, retaining profitable customers, etc., can now be dealt with efficiently. The fact that banks have customers who default is known to all. It, too, can be taken care of by mining data. One can use this technique to identify potential defaulters, followed by the management taking decisions for the issuance of credit cards, loans, etc.
Everyone is aware of how crucial this sector is in shaping the future of the country. With data mining, it is possible to predict the learning behavior of the students. It is also possible for the educational institutes to make accurate decisions and predict the student’s results. With this prediction, they can also change their teaching style and pattern.
This sector is growing at a pace beyond imagination. That being said, mining data can help the industry players improve their service quality and stay ahead of others. Analyzing spatiotemporal databases’ patterns can play a pivotal role in mobile telecommunication, web and information services, and mobile computing.
Undoubtedly, data is prone to fraud, and the more considerable the amount of data, the higher the frauds. Traditional methods of detecting fraud are not only time-consuming but also complicated. Data mining can prove to be a savior here as well. Data is collected in the form of records, and these records are then classified as fraudulent or non-fraudulent. For this, a model is built using the information that is collected. Then, an algorithm is deployed to identify whether the record is fraudulent or not. Using this technique, one can detect frauds not just quickly but also more efficiently.
Biological data analysis
Fields like biological research, genomics, and proteomics require mining biological data. The useful information so obtained helps characterize patients’ behavior, predicting when they will visit the office, identifying medical therapies for their illnesses, and so much more.
For countries like India that heavily rely on agriculture, any technology that aids in better results is a boon. Mining data has served to be a blessing for farmers as well. Using the right techniques, the farmers can find the yield of vegetables using the plants’ amount of water.
It is yet another area that makes extensive use of data. It is no less than a cakewalk to schedule vehicles’ movement from warehouses to outlets, followed by analyzing the product loading patterns with good mining.
Let’s Sum Up
Data mining has a bewildering range of applications in not one, not two but hundreds of areas. Above are just a few of the many areas where this technique has proved beneficial. Mining data has the potential to unravel new possibilities and open up new avenues of business opportunities. For this very reason, companies are not thinking much before engaging in the mining of data as it helps the business in improved decision-making through analysis of hidden patterns and trends.