What is data mining

Data mining is the process of analyzing enormous amounts of information and datasets, extracting (or
“mining”) useful intelligence to help organizations solve problems, predict trends, mitigate risks, and find
new opportunities. Data mining is like actual mining because, in both cases, the miners are sifting through
mountains of material to find valuable resources and elements.

Data mining also includes establishing relationships and finding patterns, anomalies, and correlations to
tackle issues, creating actionable information in the process. Data mining is a wide-ranging and varied
process that includes many different components, some of which are even confused for data mining itself.

Data mining is a process that uses statistical, mathematical, and artificial intelligence techniques to extract
and identify useful information and subsequent knowledge (or patterns) from large sets of data.

Data mining is sometimes called Knowledge Discovery in Data, or KDD.

Many other names that are associated with data mining include knowledge extraction, pattern analysis, data
archaeology, information harvesting, pattern searching, and data dredging.

Now that we have learned what is data mining, we will now look at the data mining steps.

Data Mining Steps

When asking “what is data mining,” let’s break it down into the steps data scientists and analysts take when
tackling a data mining project.

1. Understand Business

What is the company’s current situation, the project’s objectives, and what defines success?

2. Understand the Data

Figure out what kind of data is needed to solve the issue, and then collect it from the proper sources.

3. Prepare the Data

Resolve data quality problems like duplicate, missing, or corrupted data, then prepare the data in a format
suitable to resolve the business problem.
4. Model the Data

Employ algorithms to ascertain data patterns. Data scientists create, test, and evaluate the model.

5. Evaluate the Data

Decide whether and how effective the results delivered by a particular model will help meet the business
goal or remedy the problem. Sometimes there’s an iterative phase for finding the best algorithm,
especially if the data scientists don’t get it quite right the first time. There may be some data mining
algorithms shopping around.

6. Deploy the Solution

Give the results of the project to the people in charge of making decisions.

What Are the Benefits of Data Mining?

Since we live and work in a data-centric world, it’s essential to get as many advantages as possible. Data
mining provides us with the means of resolving problems and issues in this challenging information age.
Data mining benefits include:

 It helps companies gather reliable information

 It’s an efficient, cost-effective solution compared to other data applications

 It helps businesses make profitable production and operational adjustments

 Data mining uses both new and legacy systems

 It helps businesses make informed decisions

 It helps detect credit risks and fraud

 It helps data scientists easily analyze enormous amounts of data quickly

 Data scientists can use the information to detect fraud, build risk models, and improve product safety

 It helps data scientists quickly initiate automated predictions of behaviors and trends and discover hidden
patterns

After having learned what is data mining, let us look into the drawbacks.
Are There Any Drawbacks to Data Mining?

Nothing’s perfect, including data mining. These are the major issues in data mining:

 Many data analytics tools are complex and challenging to use. Data scientists need the right training to use
the tools effectively.

 Speaking of the tools, different ones work with varying types of data mining, depending on the algorithms
they employ. Thus, data analysts must be sure to choose the correct tools.

 Data mining techniques are not infallible, so there’s always the risk that the information isn’t entirely
accurate. This obstacle is especially relevant if there’s a lack of diversity in the dataset.

 Companies can potentially sell the customer data they have gleaned to other businesses and organizations,
raising privacy concerns.

 Data mining requires large databases, making the process hard to manage.

After going through what is data mining, let us look into the various kinds.

What Kinds of Data Mining Tools Are Out There?

As engineers are fond of saying, “Use the right tool for the right job.” Here is a selection of tools and
techniques that provide data analysts with diverse data mining functionalities.

 Artificial Intelligence

AI systems perform analytical functions that mimic human intelligence, such as learning, planning,
problem-solving, and reasoning.

 Association Rule Learning

This toolset, also called market basket analysis, searches for relationships among dataset variables. For
example, association rule learning can determine which products are frequently purchased together (e.g., a
smartphone and a protective case).

 Clustering

This process partitions datasets into a set of meaningful sub-classes, known as clusters. The process helps
users understand the natural structure or grouping within the data.
 Classification

This technique assigns particular items in a dataset to different target categories or classes. The goal is to
develop accurate predictions within the target class for each case in the data.

 Data Analytics

The data analytics process enables professionals to evaluate digital information and turn it into useful
business intelligence.

 Data Cleansing and Preparation

This technique transforms the data into a form optimal for further analysis and processing. Preparation
includes activities such as identifying and removing errors and missing or duplicate data.

 Data Warehousing

Data warehousing consists of an extensive collection of business data that businesses use to help them
make decisions. Warehousing is a fundamental and necessary component of most large-scale data mining
efforts.

 Machine Learning

Related to the AI technique mentioned earlier, machine learning is a computer programming technique
that employs statistical probabilities to provide computers with the ability to learn without human
intervention or being manually programmed.

 Regression

The regression technique predicts a range of numeric values in categories such as sales, stock prices, or
even temperature. The ranges are based on the information found in a particular data set.
Data Mining Applications

Data mining is a useful and versatile tool for today’s competitive businesses. Here are some data mining
examples, showing a broad range of applications.

Banks
Data mining helps banks work with credit ratings and anti-fraud systems, analyzing customer financial data,
purchasing transactions, and card transactions. Data mining also helps banks better understand their
customers’ online habits and preferences, which helps when designing a new marketing campaign.
Healthcare
Data mining helps doctors create more accurate diagnoses by bringing together every patient’s medical
history, physical examination results, medications, and treatment patterns. Mining also helps fight fraud and
waste and bring about a more cost-effective health resource management strategy.

Marketing
If there was ever an application that benefitted from data mining, it’s marketing! After all, marketing’s heart
and soul is all about targeting customers effectively for maximum results. Of course, the best way to target
your audience is to know as much about them as possible. Data mining helps bring together data on age,
gender, tastes, income level, location, and spending habits to create more effective personalized loyalty
campaigns. Data marketing can even predict which customers will more likely unsubscribe to a mailing list
or other related service. Armed with that information, companies can take steps to retain those customers
before they get the chance to leave!

Retail
The world of retail and marketing go hand-in-hand, but the former still warrants its separate listing. Retail
stores and supermarkets can use purchasing patterns to narrow down product associations and determine
which items should be stocked in the store and where they should go. Data mining also pinpoints which
campaigns get the most response.

Scientific Analysis: Scientific simulations are generating bulks of data every day. This includes data
collected from nuclear laboratories, data about human psychology, etc. Data mining techniques are capable
of the analysis of these data. Now we can capture and store more new data faster than we can analyze the
old data already accumulated. Example of scientific analysis:
 Sequence analysis in bioinformatics
 Classification of astronomical objects
 Medical decision support.
Intrusion Detection: A network intrusion refers to any unauthorized activity on a
digital network. Network intrusions often involve stealing valuable network resources. Data mining
technique plays a vital role in searching intrusion detection, network attacks, and anomalies. These
techniques help in selecting and refining useful and relevant information from large data sets. Data mining
technique helps in classify relevant data for Intrusion Detection System. Intrusion Detection system
generates alarms for the network traffic about the foreign invasions in the system. For example:
 Detect security violations
 Misuse Detection
 Anomaly Detection

Business Transactions: Every business industry is memorized for perpetuity. Such transactions are usually
time-related and can be inter-business deals or intra-business operations. The effective and in-time use of
the data in a reasonable time frame for competitive decision-making is definitely the most important
problem to solve for businesses that struggle to survive in a highly competitive world. Data mining helps to
analyze these business transactions and identify marketing approaches and decision-making. Example :
 Direct mail targeting
 Stock trading
 Customer segmentation
 Churn prediction (Churn prediction is one of the most popular Big Data use cases in business)
Market Basket Analysis: Market Basket Analysis is a technique that gives the careful study of purchases
done by a customer in a supermarket. This concept identifies the pattern of frequent purchase items by
customers. This analysis can help to promote deals, offers, sale by the companies and data mining
techniques helps to achieve this analysis task. Example:
 Data mining concepts are in use for Sales and marketing to provide better customer service, to improve
cross-selling opportunities, to increase direct mail response rates.
 Customer Retention in the form of pattern identification and prediction of likely defections is possible
by Data mining.
 Risk Assessment and Fraud area also use the data-mining concept for identifying inappropriate or
unusual behavior etc.
Education: For analyzing the education sector, data mining uses Educational Data Mining (EDM) method.
This method generates patterns that can be used both by learners and educators. By using data mining
EDM we can perform some educational task:
 Predicting students admission in higher education
 Predicting students profiling
 Predicting student performance
 Teachers teaching performance
 Curriculum development
 Predicting student placement opportunities
Research: A data mining technique can perform predictions, classification, clustering, associations, and
grouping of data with perfection in the research area. Rules generated by data mining are unique to find
results. In most of the technical research in data mining, we create a training model and testing model. The
training/testing model is a strategy to measure the precision of the proposed model. It is called Train/Test
because we split the data set into two sets: a training data set and a testing data set. A training data set used
to design the training model whereas testing data set is used in the testing model. Example:
 Classification of uncertain data.
 Information-based clustering.
 Decision support system
 Web Mining
 Domain-driven data mining
 IoT (Internet of Things)and Cybersecurity
 Smart farming IoT(Internet of Things)
Healthcare and Insurance: A Pharmaceutical sector can examine its new deals force activity and their
outcomes to improve the focusing of high-value physicians and figure out which promoting activities will
have the best effect in the following upcoming months, Whereas the Insurance sector, data mining can help
to predict which customers will buy new policies, identify behavior patterns of risky customers and
identify fraudulent behavior of customers.
 Claims analysis i.e which medical procedures are claimed together.
 Identify successful medical therapies for different illnesses.
 Characterizes patient behavior to predict office visits.
Transportation: A diversified transportation company with a large direct sales force can apply data
mining to identify the best prospects for its services. A large consumer merchandise organization can apply
information mining to improve its business cycle to retailers.
 Determine the distribution schedules among outlets.
 Analyze loading patterns.
Financial/Banking Sector: A credit card company can leverage its vast warehouse of customer transaction
data to identify customers most likely to be interested in a new credit product.
 Credit card fraud detection.
 Identify ‘Loyal’ customers.
 Extraction of information related to customers.
 Determine credit card spending by customer groups.

Top 10 Data Mining Tools

1. MonkeyLearn | No-code text mining tools

2. RapidMiner | Drag and drop workflows or data mining in Python
3. Oracle Data Mining | Predictive data mining models
4. IBM SPSS Modeler | A predictive analytics platform for data scientists
5. Weka | Open-source software for data mining
6. Knime | Pre-built components for data mining projects
7. H2O | Open-source library offering data mining in Python
8. Orange | Open-source data mining toolbox
9. Apache Mahout | Ideal for complex and large-scale data mining