Business Intelligence

Lecture 5. Data Mining for Business Intelligence

Clustering & Profiling

Meiling Jiang, PhD

Meiling_Jiang@baylor.edu
 Business Intelligence

Decision optimization What is the best decision?

Advanced
Predictive modeling What will happen next?
analytics
Competitive Advantage

Forecasting What if these trends continue? SAS–Enterprise Miner

Basic statistical analysis Why is this happening?

Basic
Reporting with early warning What actions are needed?
analytics

Dynamic reporting Where exactly are the problems?

Ad-hoc reporting How many, how often, where? Reporting

Basic reporting What happened?

e.g., SAS-VA

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Data Mining for Business Intelligence

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 Data Mining: Pattern Discovery

 Two data mining techniques for “unsupervised” pattern discovery

 Clustering & profiling

 Association (market basket) & sequence analysis

 Unsupervised means…
 No target variable (no dependent variable) with which to associate other variables
 Not a predictive method
 No pre-defined classes or groups

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 Clustering/Segmenting

 A pattern recognition method

 Unsupervised learning
• Not predictions
• No pre-defined groups

 Purpose
• To group data records based on similarities of their input (independent) variables

 Results
• Groupings are Clusters or Segments.

Input Input Input Input Grouping

Cluster 1

Cluster 3

Data records Cluster 2

Cluster 2

Cluster 1

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 An Example: Segmentation of Retail Customers

 Identifying customer segments

 While you have thousands of customers, there are really only a few major types into
which most customers can be grouped

 Bargain hunter
 Man/woman on a mission
 Impulse shopper
 Weary parent
 DINK: dual income, no kids

 What customer variables would be useful to make these customer

groups?

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 An Example: Segmentation of Retail Customers

 Analysis 1: clustering
 Customer data records are grouped (clustered) by common characteristics of input
variables

 Analysis 2: profiling
 Each cluster is named (profiled) according to input variables best describing that
cluster

 Expected results
 Cluster 1: bargain hunter
 Cluster 2: man/woman on a mission
 Cluster 3: impulse shopper
 Cluster 4: weary parent
 Cluster 5: DINK

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 Clustering & Profiling: The Main Idea

 Goal: Form groups (clusters) of similar records

 Analysis 1. clustering: group data records into distinct segments based on
demographic variables and/or behaviors
 Analysis 2. profiling: create profiles or descriptive tags based on the variables used to
cluster the data records
 Used for future marketing strategies
 Useful in segmenting markets

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SAS Enterprise Miner

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