DATA MINING

IN MARKETING
 INTRODUCTION

MARKETING DATA MINING

The action or business of promoting The practice of examining large pre-
and selling products or services, existing databases in order to
including market research and generate new information.
advertising.

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 TECHNIQUES
Which data mining techniques are being used
where in Marketing?
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 CLUSTER
ANALYSIS

INTRUSION
DETECTION NEURAL
NETWORKS

DATA
MINING
ASSOCIATION REGRESSION
RULE LEARNING ANALYSIS

ANOMALY CLASSIFICATION
DETECTION ANALYSIS

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 TECHNIQUES
CLUSTER ANALYSIS
to identify single target groups
• Enables identifying a given user group
according to common features within a
database.
• Features can include age, geographic
location, education level and so on
• Segment the database and, for example,
send a promotion to the right target for
that product or service .
REGRESSION ANALYSIS
to make marketing forecasts
•Enables us to study changes, habits,
customer satisfaction levels and other
factors linked to criteria such as
advertising campaign budget, or similar
costs.
•When one of these criterion is changed
you will have a pretty clear idea of what
will happen to your user basin.
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 TECHNIQUES
CLASSIFICATION ANALYSIS
to identify spams
•enables recognizing the patterns
(recurring schemes) inside a database.
• classify an email reply from a customer.
• recognize any links between potential
customers for your products before and
after running an advertising campaign.
ANOMALY DETECTION
to recognize any abnormalities
•eliminate any database inconsistencies
or anomalies at source.
•handle the consequences of any
mistakes that are made by employees,
suppliers or even customers.
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 TECHNIQUES
NEURAL NETWORKS
to automate learning
•To complement clustering and decision
trees is the neural network concept.
classify an email reply from a customer.
• the computer managing your database,
“learns” to identify a certain pattern
containing elements
INTRUSION DETECTION
for greater system security
To avoid using databases infected by
intruders (individual values added by
hackers, or even viruses that duplicate
the data) it is sufficient to search for the
intruders, a data mining technique that
decontaminates the database and
guarantees greater security for the entire
system.
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 TECHNIQUES

ASSOCIATION RULE LEARNING

to discover links between data
• Create interesting relations between the
data we have available.
• 90% of customers who buy a product
online then buy another, and always the
same one.

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NEURAL NETWORKS
What are neural networks and how do they
help marketing?
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 Artificial Neural Networks (ANN),
which are in essence, computing
systems modeled on our very own
biological neurological systems,
have made the concept of a self-
thinking AI entity a reality.
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 NEURAL NETWORKS

Artificial neural networks are progressively learning systems that

continuously improve their function over time
The network is made of hundreds, thousands or even millions of neurons called
units arranged in three interconnected layers:

In ‘Deep Learning’
there are multiple
hidden layers.

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 TYPES OF LEARNING

SUPERVISED
◉ Here the ANN is “taught” by giving it both input variables and expected outputs
for those inputs. Neural networks learn through a process known as “back-
propagation” - where they compare their actual output to the expected output and
then self-correct to narrow the margin of error between the actual and expected
output. Once they have reached the point where they can no longer be trained,
they can then be fed a new set of data, and can be expected to produce the
expected outcomes with accuracy.
◉ A good example of a supervised ANN is face-recognition software: the software is
taught how to recognize distinctive features of the face through a series of images,
until it can identify faces.

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 TYPES OF LEARNING

◉ UNSUPERVISED
The network is only fed a set of input variables, but no expected outputs. It is left to
identify the structure and relationships between the different inputs. From there, the
network can group the data into inherent groups based on the similarities in certain
characteristics. It can also be used to generate associative relationships between the data.

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NEURAL NETWORKS IN MARKETING

PREDICTIVE SALES
ANALYTICS FORCASTING

MARKET
SEGMENTA
TION

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 PREDICTIVE ANALYTICS

◉ Predictive analytics is a confluence of two statistical

methodologies, data mining and predictive modeling,
which can be augmented by the machine learning
capabilities of neural networks.
◉ By learning to recognize the current and past trends and
behaviors, artificial neural networks can make predictions
on future outcomes within a campaign.

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 PREDICTIVE ANALYTICS

◉ Microsoft used the BrainMaker neural network to fine-tune its direct

mailing campaign, increasing its mail response rate from 4.9% to 8.2%.
◉ The network analyzed data associated with 25 variables such as the recent
product purchased by a customer, the date of first product purchase and
the time elapsed between the release of a new product and the purchase
of the product.
◉ By analyzing behavioral patterns associated with each of these purchases,
the NN was made to score each of the users according to the likelihood of
them opening a mailer. This allowed Microsoft to incisively target only
those users with a higher likelihood of opening a second mailer from them,
and thereby increase their mail response rate.

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 MARKET SEGMENTATION

◉ A customer’s response, to any product, is influenced by a number of factors, including

specific characteristics associated with them, such as their demographics, socio-
economic status and geographic location, and more importantly, by their attitude
and emotions at any given time.
◉ Neural networks can be used effectively to segment the audience into distinct
groups based on the above-mentioned qualifications.
◉ Unsupervised neural networks can be used to segment the data based on similarities
in broader characteristics like their demographic or geographic locations;
◉ Supervised neural networks can be used to create more incisive segments based on
very precise conditions like their buying behavior or actions they took on marketing
content, such as a download of a particular e-book or signing up for a newsletter.

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 SALES FORECASTING

◉ Estimating a business’s future performance,

both long and short-term, based on historical
data, competitor and industry analysis, and
economic trends is essential to its success.
◉ Insights drawn from sales forecasting can help a
business make informed marketing decisions
pertaining to their growth and increase in their
sales revenue.
◉ Neural networks trained with the back-
propagation algorithm can be used to predict
future sales performances, product demand,
and inventory control.

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 A COMPARISON
How marketing is done with or without AI? 3 19
NORMALLY…

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WITH AI…

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WITH AI…

smartly segmenting
customers so they can
easily be excluded from (or
included in) the correlations.
This will help isolate the
answers

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WITH AI…

Intelligent algorithms
(those that nearly self-
build and connect
all behavioral
marketing dots) result
in more relevant
workflows, and
automation becomes
a breeze.

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CONCLUSION

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THANK YOU
ANY QUESTIONS?

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