Management Information Systems

Assignement-1
On

“Application of Data mining techniques”

Submitted by:
Swostik Rout
MBA/2019-21/44

Guided By:
Prof. Avijit Mondal

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 CONTENTS

Sl. Topic Page No.

No.

1. Introduction 3

2. Leading data mining techniques 3-5

3. Application of data mining at Amazon 5-7

4. Conclusion 7

5. Bibliography 7

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1. Introduction
Data mining is the process of examining vast quantities of data in order to make a
statistically likely prediction. Data mining could be used, for instance, to identify when
high spending customers interact with your business, to determine which promotions
succeed, or explore the impact of the weather on your business.

Data mining principles have been around for many years in conjunction with data
warehouses, and have now taken on greater prevalence with the advent of Big Data.

Data analytics and the growth in both structured and unstructured data has also prompted
data mining techniques to change, since companies are now dealing with larger data sets
with more varied content. Additionally, artificial intelligence and machine learning are
automating the process of data mining.

Regardless of the technique, data mining typically evolves over three steps:

 Exploration: First you must prepare the data, paring down what you need and don’t
need, eliminating duplicates or useless data, and narrowing your data collection to just
what you can use.
 Modeling: Build your statistical models with the goal of evaluating which will give the
best and most accurate predictions. This can be time-consuming as you apply different
models to the same data set over and over again (which can be processor-intensive) and
then compare the results.
 Deployment: In this final stage you test your model, against both old data and new data,
to generate predictions or estimates of the expected outcome.

2. Leading Data Mining Techniques

Data mining is a highly effective process – with the right technique. The challenge is
choosing the best technique for your situation, because there are many to choose from
and some are better suited to different kinds of data than others. So what are the major
techniques?

2.1. Classification Analysis

This form of analysis is used to classify different data in different classes. Classification
is similar to clustering in that it also segments data records into different segments called
classes. In classification, the structure or identity of the data is known. A popular
example is e-mail to label email as legitimate or as spam, based on known patterns.

2.2. Clustering
The opposite of classification, clustering is a form of analysis with the structure of the
data is discovered as it is processed by being compared to similar data. It deals more with
the unknown, unlike classification.

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2.3. Anomaly or Outlier Detection
This is the process of examining data for errors that may require further evaluation and
human intervention to either use the data or discard it.

2.4. Regression Analysis

A statistical process for estimating the relationships between variables which helps you
understand the characteristic value of the dependent variable changes. Generally used for
predictions, it helps to determine if any one of the independent variables is varied, so if
you change one variable, a separate variable is affected.

2.5. Prediction/Induction Rule

This technique is what data mining is all about. It uses past data to predict future actions
or behaviors. The simplest example is examining a person’s credit history to make a loan
decision. Induction is similar in that it asks if a given action occurs, then another and
another again, then we can expect this result.

2.6. Summarization
Exactly as it sounds, summarization present a mode compact representation of the data
set, thoroughly processed and modeled to give a clear overview of the results.

2.7. Sequential Patterns

One of the many forms of data mining, sequential patterns are specifically designed to
discover a sequential series of events. It is one of the more common forms of mining as
data by default is recorded sequentially, such as sales patterns over the course of a day.

2.8. Decision Tree Learning

Decision tree learning is part of a predictive model where decisions are made based on
steps or observations. It predicts the value of a variable based on several inputs. It’s
basically an overcharged "If-Then" statement, making decisions on the answers it gets to
the question it asks.

2.9. Tracking Patterns

This is one of the most basic techniques in data mining. You simply learn to recognize
patterns in your data sets, such as regular increases and decreases in foot traffic during
the day or week or when certain products tend to sell more often, such as beer on a
football weekend.
2.10. Statistical Techniques
While most data mining techniques focus on prediction based on past data, statistics
focuses on probabilistic models, specifically inference. In short, it’s much more of an
educated guess. Statistics is only about quantifying data, whereas data mining builds
models to detect patterns in data.

2.11. Visualization
Data visualization is the process of conveying information that has been processed in a
simple to understand visual form, such as charts, graphs, digital images, and animation.

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 There are a number of visualization tools, starting with Microsoft Excel but also
RapidMiner, WEKA, the R programming language, and Orange.

2.12. Neural Networks

Neural network data mining is the process of gathering and extracting data by
recognizing existing patterns in a database using an artificial neural network. An artificial
neural network is structured like the neural network in humans, where neurons are the
conduits for the five senses. An artificial neural network acts as a conduit for input but is
a complex mathematical equation that processes data rather than feels sensory input.

2.13. Data Warehousing

You can’t have data mining without data warehousing. Data warehouses are the
databases where structured data resides and is processed and prepared for mining. It does
the task of sorting data, classifying it, discarding unusable data and setting up metadata.

2.14. Association Rule Learning

This is a method to identify interesting relations and interdependencies between different
variables in large databases. This technique can help you find hidden patterns in the data
that that might not otherwise be clear or obvious. It’s often used in machine learning.

2.15. Long-Term Memory Processing

Data processing tends to be immediate and the results are often used, stored, or discarded,
with new results generated at a later date. In some cases, though, things like decision
trees are not built with a single pass of the data but over time, as new data comes in, and
the tree is populated and expanded. So long-term processing is done as data is added to
existing models and the model expands.

3. Application of Data Mining at Amazon

The data mining software is available in market to help people analyze the data from
various aspects, categories are made and then relationships are identified. It is a useful
technique to summarize the information among databases at large extent. It helps the
organization to identify the relationship between the internal and external factors
affecting the marketing sales, profits and customer satisfaction. This approach is very
useful for marketing as it helps retailer to check the sales record of purchases and give
promotion to customer reviewing his purchase history. The warranty card data can be
used for creating promotion strategies to attract more customers. It thus increases
customer loyalty and profitability of company.

3.1. Data mining as a secret weapon of Marketing

Having millions of customers throughout the world, Amazon is greatest online store
offering amazing products and services online. They have marvelous customer
database and are using this data to build strong relationships with their customers. By

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 analyzing and summarizing the useful information about customers, they design their
strategies regarding promotions and products enhancements. It has incorporated the
concept of data mining from supply chain to marketing operations (Dholakia,2013).
Amazon also uses data mining for marketing of their products in various aspects to
have a competitive advantage. Customers want personalization from the companies
they are purchasing products mostly online companies due to increased interventions
of social media. Providing the targeted information to the customer service
representative dealing with particular customer is an opportunity needed to be
developed. If employees have the right tools to access the required information while
dealing with customer it will save lots of time and leave a great impression on the
customer. At Amazon the customer representatives have access to complete customer
data and can analyze theproblem and discuss as soon as get call from customer. The
customers will feel comfortable and relaxed that they knew his problem. Smart
retailers as amazon make effective use of data gathered through effective sources and
use the outcomes more reasonably. Also the customers have control over information
they want to share or not. This gives them a sense of ownership and control.

Customer data has become a way of building strong brands and customer loyalty
through effective data mining. Every customer is treated as individual and given
priority. They feel comfortable with service interacting with them if they are getting
control and transparency. The marketers get information with every click. The
customer purchase history at amazon helps them to identify customer preferences and
choices (Clufia,Bunzel&Snnuggs.2014). They then conduct the advertising campaign
according to the customer choice. The movement of social data is much faster than
manual data and is uploaded automatically. The behavior patterns are studied in
identifying the marketing channels and making the marketing strategies accordingly.

3.2. Basket Analysis by Amazon

One approach used is called basket analysis through which the customer behavior is
predicted with past performance depending on the purchases and preference.
Customer use credit cards in online shopping mostly. Credit card data is used to
evaluate the customer behavior through credit limit, interest rates and terms. This data
can also be used to identify frauds in online transactions. For example Amazon
suggests customers to purchase the products on basis of their previous purchases. So
it knows what customers is trying to purchase by analyzing customer need.

3.3. Remote computing Service by Amazon

This is done by identifying and evaluating customer wants through effective research
and providing them what they desire for. Their marketing strategy designed through
data mining focus on three things:

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  Customers care about price and discounts. Amazon has focused on offering cost
competitive products to customers. Customers enjoy a reliable experience while
shopping at Amazon. This is done through setting fixed cost for large inventory and
customers.
 Customers are provided with wishlists, recommendations and search the product
facilities. They can go for delivery on same day by putting orders anytime.
 Offering a wide range of products, they are not only retailers but act as platform for
buyers and sellers. Their services are available 24 hours and in operating condition.
Their marketing efforts have given them revenue projections which cannot be seen
anywhere. The email measurement and management is fully automated where
customer inboxes are managed so that they do not receive too much or too little
promotional offers. The customers who have same product searches are linked
together to identify average behavior (Meadows,2013). The data is managed so
efficiently that individual customer gets unique recommendation based on his
purchase history. Sponsored links are also available on site which is bought on cost
per click basis. Amazon has introduced its name in market through predictive
marketing. Creating a commercial portrait of each customer, the company has got
success by predicting customer future purchases. It’s just taking a chance and
building strong customer relations. The needed changes and adjustments are made on
amazon on daily basis to attract more customers. A good business decision by
Amazon has brought it among giant player in market

4. Conclusion
The online shopping experience has been shaped by data mining for companies like
amazon. It was adopted as a marketing strategy by the company. It has focused on
creating personalized store for each customer where he enter and then it becomes
irresistible for him to not to buy anything. Most of the products are sold on cost or very
little profit is kept thus serving and attracting more customers. Customer likes are studied
and required suggestions are made through data management. Thus data mining has not
only changed the ways of gathering data but also opened new doors for online retailers
for their marketing and revenue generating activities. Offering interest to both buyer and
seller, data mining has brought morepersonalization for customers. It has become key to
survival in this global market while if used effectively, the online companies can increase
their customers ad profits like amazon.

5. Bibliography

 https://www.datamation.com/big-data/data-mining-techniques.html
 https://www.ijser.org/researchpaper/Data-Mining-by-Amazon.pdf