Data in some shape or form constantly surrounds us. Whether on our smartphones or laptops, whatever applications we use are producing tons of valuable data. This data is highly beneficial for companies looking to gather insights and make business decisions.
Therefore, data analysis has been an absolute saviour for all companies far and wide and has helped them make much more calculated decisions. However, Data Analysis is sort of like the last stage of the Data Science process. It all begins with properly collecting and gathering data, and that is what is known as Data Mining. If you are a beginner in data analytics and data science, upGrad’s data science programs can definitely help you dive deeper into the world of data and analytics.
Data mining helps in better understanding of their customers, patterns, acquisition of customers and exploration of business opportunities. It holds importance in various industries such as helping banks with credit card ratings, filtration of emails, etc.
The scope of data mining is not limited and it holds diverse industry applications. For example, it is useful in financial analysis, biological data analysis, retail industry, e-commerce, energy industry, etc.
The process of Data Mining is not as easy as it may seem, and if you’re starting in this field, you need to know all the whats, hows, and whys around Data Mining. Through this article, we’ll take you through various nuances that’ll help you understand the fundamentals of Data Mining in a much more rigorous manner.
What is the Purpose of Data Mining?
The purpose of Data Mining is to collect data from disparate sources and get them under one hood. Mining is all about collecting data, bringing it to a proper format, processing it, and extracting relevant insights from it.
Data Mining helps detect trends from heaps of data, predict outcomes, model target audience, and gather insightful information about customer behavior and sentiments. Using these insights, companies can adapt accordingly and offer the best possible services.
Data mining helps to solve business problems through data analysis. It helps in the increased revenue of the company. Data mining helps in customer identification, which helps the business to carve out a business strategy that attracts positive attention from the customer groups.
Data mining scope in future is going to exceed. With businesses turning digital the need for procuring and mostly importantly managing data becomes important. Almost every business has data at its core and that requires professionals to manage this data.
Let’s look at the different Data Mining operations in depth!
How Does Data Mining Work?
Data Mining is a step-by-step process that broadly consists of the following stages:
- Building target datasets by selecting the required kind of data.
- Exploring data and preprocessing it to bring it to consistent formats.
- Preparing the data by creating segmentation rules, cleaning noise, performing anomaly checks, filling in missing values, and more.
- Finally comes the stage of using Machine Learning algorithms on the mined data to get things done!
When it comes to Machine Learning, here are some of the types of learning algorithms that are often used:
- Supervised Machine Learning algorithms
- For sorting and arranging structured data.
- The classification method is used to figure out known patterns and is then applied to new information (for example, classifying an input email letter as spam or not spam).
- Then, regression is performed to predict specific values like temperatures, rates, and such.
- Once regression is completed, normalization is carried out to flatten the independent variables of data sets and reorganize data into a more cohesive form.
Supervised learning is very useful as it allows for the collection of data from prior experience. The machine learning model uses prior experience in order to optimise the data.
The model of supervised learning is of two types that is regression and classification. Some examples of supervised learning are bioinformatics, bioinformatics, prediction of prices, etc.
- Unsupervised Machine Learning algorithms
- For exploring different data sets that are unlabeled.
- The clustering process is used to form clusters/groups/structures of similar data that have distinct patterns.
- Association rules are used to identify the relationship between the variables of the input data.
- Summarization is then used for reporting the finding and visualizing the data.
Unsupervised learning is highly useful for gaining insights from data. The unsupervised learning machine model learns in the similar way a human being does that is through their experiences. The involvement of unlabeled and uncategorized data is present in the unsupervised learning model.
Basically, the unsupervised learning machine model draws its inferences from the unrecognized and unlabeled data. This type of model is very useful in finding patterns without knowing the data present in it.
This is very useful in today’s times because of its high industry applicability and acceptability. It becomes very useful in situations of security where the attackers keep changing their methods, pattern recognition, audience segmentation, etc. are some of its examples.
- Semi-Supervised Machine Learning algorithms: This approach uses a combination of both supervised and unsupervised machine learning algorithms.
Some of the examples of semi-supervised machine learning are speech recognition, web classification, text document classification, etc.
The application of semi supervised learning is vast as the industry application are also numerous. The application of semi supervised are in the finance sector, education, technology, entertainment, etc.
- Neural Network Learning: Neural Networks take inspiration from biological neuronal networks that make up our brain’s structure and function. These are more complex systems used to build self-learning models to tackle more intricate tasks and operations.
Most Used Data Mining Techniques
The above-listed methods are used for enabling the machines to learn on their own. These steps involve various statistical and pattern recognition strategies, which are based on the following techniques:
- Classification and clustering: This is the process of discovering groups, clusters within your dataset. Classification is used in the case of supervised learning, whereas clustering is used in the case of unsupervised learning. For example, based on the purchases made by customers in the past month, you can group them into “low expenditure” and “high expenditure,” and then, based on this classification (or clustering), you can refine your marketing strategies for these groups.
Classification and clustering are the methods to analyze the data. Both of these methods serve different purposes such as classification is used for labelling of data. Whereas the clustering as the name suggests, is used for grouping of similar data instances together.
- Pattern detection: Tracking and detecting patterns involves recognizing deviations in the dataset at certain intervals. For instance, website traffic can peak at specific times during the day. These patterns reveal a lot about how people are engaging with the services.
Pattern recognition data mining is used in the recognition of the data based on the already known knowledge. For example, the prediction by the email engines of the spam or non spam emails.
- Association: Association is the process of tracking patterns and analyzing dependencies and associations. For instance, customers tend to purchase mobile covers once they’ve purchased mobile phones – this simple association can be useful for marketing activities.
As the name suggest, association method in the data mining discovers the probability of co-occurrence of items that are in the collection.
Some of the industry advantages of the association are market basket analysis, customer analytics, lie detection, fraud detection, education, etc.
- Regression analysis: Regression analysis is all about identifying various variables and analyzing their effects on the metrics you’re studying. For example, sales of cold drinks will be directly correlated to the temperate.
Regression analysis is used for the prediction of numerical values. It is used for the prediction of product or services. The prediction is used in various industries such as marketing behavior, finance, etc.
Broadly there are two types of regression models such as logistic regression and linear regression. Regression is a method determining the relationship between a dependent variable and independent variable.
- Outlier detection: Outliers are those data values that have seemingly different features from a large chunk of other data. Detecting and removing such outliers is essential for accurate data analysis.
The outlier is used for detection of the bad data. There could have been various reasons behind the outlier’s presence such as incorrectly coded wrong data, etc.
There can be various uses for outlier detection such as cybersecurity, fraud detection, military surveillance, healthcare insurance, etc.
- Prediction: Data Mining can help in building forecasting models that can later predict how independent variables are likely to modify in the future. For instance, eCommerce businesses can use customer and sales data to develop models that predict which products are likely to be returned or replaced.
Evidently, Data Mining is extremely useful for a number of things. We’ll later see the various scope and opportunities while working with Data Science. For now, let’s talk a bit about some of the challenges with Data Mining.
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Challenges with Data Mining
If you’re just starting out with Data Analysis and are getting acquainted with Data Mining, it’s important to know the various challenges that this field faces. Here are some such challenges that you should be looking out for!
Excess data
This is an obvious challenge, but one that must be reiterated no matter what. Databases are getting bigger and more disparate with time, and it is getting harder to make sense of them comprehensively. This challenge presents itself in a threefold manner:
- Segmentation of data by recognizing important factors and elements.
- Filtering the noise by eliminating outliers, filling missing values, and more.
- Activating data integrating all the gathered information into business processes.
- Complex data
- Data privacy
All the steps mentioned above require some or the other machine learning algorithm to be solved successfully.
Privacy and security concerns
Data Mining directly deals with easily identifiable data and information. As a result, privacy and security have always been one of the bigger challenges. Further, given the history of data theft and breaches, there tends to be a certain distrust in any form of data gathering.
To add to that, there are strict compliance and regulations regarding using collected data in the EU owing to the GDPR. That has also turned the Data Mining and collection operations on their head. If you really think about it, you’ll realize how Data Mining can easily be turned into a form of surveillance. You can learn about user behaviour, consuming habits, interaction with advertisements, and a lot more information that can be used for both good and bad purposes. The thin line between mining and surveillance lies in the purpose. Data Mining is always about providing a better user experience.
As a result, it is crucial to keep all the mined data safe from being altered, modified, or accessed without permission. Here are some steps that can be taken to ensure that:
- Encryption mechanisms
- Different access levels and permissions
- Consistent security audits of the network.
- Personal responsibility and defined consequences of perpetration.
Data training set
To make the final machine learning algorithm more efficient, the machine should be fed with an adequate amount of data for the required cause. This is certainly something that’s easier said than done because of these primary reasons:
- Datasets aren’t representative. For instance, consider rules for diagnosing patients. There must exist a wide range of use cases with varied combinations that provide the required flexibility. So, if these rules are based on diagnosing adults, their applications to children will be inaccurate.
- Boundary cases are missing. Boundary cases ensure that the machine clearly knows the difference between one thing from another—for instance, the difference between a cat and a dog. The machine needs to have a set of properties specific to both classes. In addition, there must also be a list of exceptions.
- Lack of adequate information. In order to attain proper training efficiency, an algorithm needs to be fed with enough data having well-defined classes and conditions of objects. Vagueness in this process generally leads to an overall mess in the data. For example, if the set of features that distinguish a cat from a dog are too vague, the machine might just label both as “mammals”.
Accuracy of Dataset
In order to be worthwhile for solving business problems, the mined data must be complete, accurate, and reliable. In case these factors aren’t met, the data will often point towards the wrong solutions. There are numerous algorithms designed to help you keep the accuracy, reliability, and completeness in check. However, the entire thing broadly depends on your understanding of what information you require and which operations will need to be performed.
In data mining, in order for the data to be reliable the proportions should be equal. The data accuracy would be helpful in achieving the better decision-making. Higher accuracy of data helps the organization in stability that bring more confidence. The data mining scope in future is high because organizations want to keep their data error- free.
Noise in dataset
Noisy data is one of the biggest challenges while working with Data Mining. Think of noise as things that add no value to the business operations. So, before working on any significant algorithms or processes, it must be filtered out to ensure that the main effort is focused on user data and not noise. Noise in data is problem-specific, so in your case, any such data that does not provide you with the information you need will be noisy for you.
In addition to noise, you also need to deal with the following two things — missing values and corrupted values.
Both of these factors affect the quality of your final results, which will influence your business decisions. Whether you’re performing prediction, classification, or segmenting – noisy or missing values can put you off in a completely different direction.
Now, talking about the scope of Data Mining in more detail, let’s explore the benefits of Data Mining for businesses. We’ll also see various examples of Data Mining in real life and some key trends – this will give you an idea of the kind of career opportunities that await you in the field of Data Mining!
Data Mining Benefits for Businesses
Apart from the overarching benefit of helping businesses make data-driven decisions, here are some other benefits of Data Mining. These are such benefits that help businesses improve their customer experience and relations and strengthen their ties with the team!
- Possible fraud detection: Data Mining is beneficial for businesses in detecting potential fraudulent activities. For instance, analysis of POS data can give retailers insights into past fraudulent transactions, leading to some form of pattern detection. Banks and other financial institutions use such techniques to identify possibly faulty customers.
Data mining is very useful for detection of fraud. It segments and classifies the millions of transactions that takes place and helps in prediction of the patterns by eventually identifying the fraud.
The methods of classification, segmentation and clusters are involved. They help in finding associations between the transactions thus helping in detecting the fraud. Fraud detection in data mining future scope is good and is expected to increase.
- Marketing optimization: By gathering data related to old campaigns, companies can figure out what is working for them and what is not. This allows them to come up with more engaging marketing techniques that are built on personalization.
The database is analysed using data mining. The relationships are analysed to optimise the marketing. The factors between whom the relationship is analysed such as age, gender, geography, etc.
Using the metrics the brand can market their products or services by customising their approach and spread loyalty campaign. This allows the business to drive the sales higher.
Apart from sales, the business can also identify the slower periods, reach to the cost cutting measures, etc. All of these methods are helpful in exploring the marketing opportunities that positively impact the business.
- Improved decision making: Data Mining allows businesses to make more informed decisions rather than just relying on their experiences or intuitions. For instance, intuition may say that a particular product isn’t selling because of its price point. Analysis, on the other hand, can reveal that it’s actually because of fewer distribution channels. Such insights allow businesses to solve root problems.
- Improved team cohesion: Data Mining is as useful for internal matters as it is for external, customer-facing operations. Using data, companies can find out about their employees’ behaviour and engagement, reward them accordingly, or help them grow if needed. In that sense, Data Mining can help improve overall team cohesion.
Data Mining in Real-World Scenarios
From small and medium enterprises to giant businesses – literally every organization today has benefitted from Data Mining in one way or the other. They’ve reduced costs, increase revenue, enhance customer service, and gather more customers. Here are some real-world use cases where Data Mining proved to be a gamechanger for the organization:
Let’s look at some real-world examples of how companies have converted data to dollars.
- Increased conversions by 40% using the right follow-up strategy: Envelopes improved its customer retention by finding out the right mailing strategy for its customers. After analyzing the bounce rates and finding out the patterns in customers leaving their website, they decided to send emails 48 hours after a visitor had bounced off it – that gave them 40% higher conversions than sending follow-up emails within a day!
- Product design improvements and driving market share: A major CPG company wanted to improve the market share of its dental care products. For that, they worked with a data analytics firm to mine data from different sources, including their own AWS database and social platforms. They analyzed more than 250,000 customer behavior patterns using text and regression analytics, including other techniques.
- Market basket analysis: Market basket analysis uses the association to help in identifying items that are likely to be purchased by individual customers. An example of this is Amazon’s recommendation engine that analyzes data like user history, abandoned and fulfilled carts, referral sites, and many more to provide personalized advertisements.
As we can see, Data Mining finds its use across different organizations of all sizes. This directly reflects in the opportunities and career paths available to those interested in the world of Data Mining and analytics. The importance of Data Mining as a tool to gather much-needed insights is not going to cease anytime soon, and the upcoming trends are a testimony to that. Let’s look at that a bit!
Data Mining trends and latest developments
Pattern detection, classification, clustering, regression analytics, and such techniques have been widely used so far. However, continuous technological advancements keep bringing something new to the table. Here are some trends in Data Mining that are looking to solve the challenges we talked about earlier while providing a better dataset for analysis.
- Solving security challenges: Data Mining is getting a lot more cautious with keeping the data secure and safe after various security problems have emerged in the past.
It is useful in detecting the patterns and thus helps in identifying the leakages that can be taken care of. Malicious activities like intrusions, hacking attempts, frauds, etc. can be prevented.
- Distributed Data Mining: As data is stored in various locations and devices today, sophisticated algorithms and techniques are being developed to mine such disparate data and make it consistent and structured for analysis.
- Spatial Data Mining: Spatial Data Mining has got to do with geographic, astronomical, and environmental data to find patterns and insights on topology and geography. This is extremely useful for businesses operating in the mapping businesses, for travel, navigation, or government services.
Spatial data mining is used for identifying the non- trivial patterns from the data sets. The spatial patterns hold information about various parameters such as photographs, historical information, etc. This is helpful for healthcare, public safety, climate understanding, etc. The professionals having the apprehension of “What is the scope of data mining?” gets answered that the scope of data mining is huge and is a prelude to a successful career.
In Conclusion
Data Mining is the first step of an elaborate data analytics process. Therefore, getting it right is of extreme importance. Issues with the mined data can lead to faulty training of machine learning models, which can result in inaccurate results. As a result, Data Mining is something that should be pursued with caution and care. This is why there’s an increasing demand for Data Mining professionals.
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