Data Mining
Determine the benefits of data mining to the businesses when employing:
Predictive analytics to understand the behaviour of customers
"The decision science which not only helps in getting rid of the guesswork out of the decision-making process but also helps in finding out the perfect solutions in the shortest possible time by making use of the scientific guidelines is known as predictive analysis" (Kaith, 2011). There are basically seven steps involved in the predictive analysis, these are: spotting the business problem, exploring various data sources, extracting patterns from data, building a sample model by making use of the data and problem, Clarify data -- finding valuable factors -- generating new variables, constructing a predictive model by making use of sampling and validating and deploying the model.
Decisions can be made very quickly by the business if they make use of this method as, they will have a lot of data to help them in their decision making process. Predictive analysis has three main benefits which are: pursuing new sources of revenues, minimizing risk and identifying fraud. Some of the examples of these benefits are being able to predict the risks associated with the credit and loan organizations as well as being able to make the predictions about coupons and promotional offers. Algorithm of this kind helps the business by testing all sorts of scenarios and situations that it will actually take them years to test in the practical world. It helps in reducing the costs associated with making mistakes. Businesses are also able to achieve competitive edge by being able to study and observe the consumer behaviour.
b. Associations discovery in products sold to customers
Association analysis can be of great use when relationships need to be found out in huge amounts of data. Two things that have to be kept in mind when making use of the association analysis with respect to the market data are:
1. It can prove to be computationally very expensive to discover patterns from the large amounts of transaction data.
2. There is a possibility that most of the discovered patterns can prove to be false as they may have happened only be...
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