Verified Document

Data Mining Businesses Can Receive Many Benefits Essay

Data Mining Businesses can receive many benefits from data mining. Which benefits they receive, however, can also depend on the way in which their data mining is undertaken. Predictive analytics are used to understand customer behavior, and businesses use the behavior of the customer in the past to attempt to determine what the customer will do in the future (Cabena, et al., 1997). While it is not an exact science, many companies believe they can use it in order to decide which products will sell most often to which customers (Nisbet, Elder, & Miner, 2009). Association discovery is another type of data mining, and is more involved with the products that are sold and how they match up to specific types of customers, as opposed to specific customers by name or other determination (Nisbet, Elder, & Miner, 2009). In other words, predictive analytics look at what customer A will buy again, but association discovery looks at what customer A will buy based on his belonging to a particular group of customers who also buy a particular product.

Web mining is used to discover information about customers on the web (Hastie, Tibshirani, & Friedman, 2001). Club cards that are used to access a company website, for example, can help a customer be tracked and his or her spending and buying habits can be discovered. Customers may not always realize that this is going to take place, but it is the only way that companies can provide "for you" deals for specific customers who are part of their rewards structure. They have to know what the customers are routinely buying in order to know what to suggest to them. Clustering is yet another way of data mining, and it looks for customers who are related in their buying habits (Nisbet, Elder, & Miner, 2009). If a particular kind of customer buys certain things very often, then it stands to reason that other customers who also appear to be the same kind would buy those same things. Of course, like any kind of data mining it is not an exact science. There are many things that can affect...

While some can be trusted, others make frequent errors in the way they calculate customer information and what they predict based on that collected information (Cabena, et al., 1997). It is possible, with some study, to predict the kinds of errors these algorithms will probably produce. For each algorithm there are different errors, but they all come down to one thing: correlation is not causation. In other words, it is really not possible to predict why a customer will buy something in every instance. Without understanding the why of the issue, the purchasing of anything becomes a guessing game (Cabena, et al., 1997). A consumer may buy something only once, or because it was on sale, or because a family member was in town and likes that particular product. That does not mean that the consumer will buy that product ever again, and does not tell the company why that product was purchased.
Most of the errors that are made in data mining come from not understanding the issue of why something was purchased (Nisbet, Elder, & Miner, 2009). Other errors can also come from using the wrong kind of analysis to get information. Depending on what kind of information a company wants to collect, a different type of data mining operation may be a better fit for that company. Before data mining is undertaken, a company must spend time understanding its various options and determining what it most wants to know (Cabena, et al., 1997; Hastie, Tibshirani, & Friedman, 2001). Once that has been done, then the company can move toward actually collecting the data and using it in order to give customers of that company a better experience.

One of the biggest issues with data mining is privacy (Nisbet, Elder, & Miner, 2009). When personal data is being collected for mining purposes, there is always the chance that customers will not take kindly to that. There are three main concerns that…

Sources used in this document:
References

Cabena, P., Hadjnian, P., Stadler, R., Verhees, J., & Zanasi, A. (1997). Discovering data mining: From concept to implementation. New York, NY: Prentice Hall.

Hastie, T., Tibshirani, R., & Friedman, J. (2001). The elements of statistical learning: Data mining, inference, and prediction. New York, NY: Springer.

Nisbet, R., Elder, J., & Miner, G. (2009). Handbook of statistical analysis & data mining applications. New York, NY: Academic Press/Elsevier.
Cite this Document:
Copy Bibliography Citation

Related Documents

Data Mining in Health Care Data Mining
Words: 1003 Length: 3 Document Type: Essay

Data Mining in Health Care Data mining has been used both intensively and extensively in many organizations.in the healthcare industry data mining is increasingly becoming popular if not essential. Data mining applications are beneficial to all parties that are involved in the healthcare industry including care providers, HealthCare organizations, patients, insurers and researchers (Kirby, Flick,.&Kerstingt, 2010). Benefits of using data mining in health care Care providers can make use of data analysis in

Data Mining Is Very Important for Operational
Words: 1731 Length: 5 Document Type: Essay

Data mining is very important for operational effectiveness but when / how to stop mining data before it becomes more trouble than it's worth? Over the last several years, advancements in technology have meant that an increasing number of companies are using data mining to be able to understand the demographics of their customers. This is when they will look at large amounts of information to figure out specific buying habits

Data Warehouse a Strategic Weapon of an Organization
Words: 19027 Length: 50 Document Type: Term Paper

Growth Aided by Data Warehousing Adaptability of data warehousing to changes Using existing data effectively can lead to growth Uses of data warehouses for Public Service Getting investment through data warehouse Using Data Warehouse for Business Information Ongoing changes in Data Warehousing The Origin of Data Warehousing and its current importance Relationship between new operating system and data warehousing Developing Organizations through Data Warehousing Telephone and Data Warehousing Choose your own partner Data Warehousing for Societal Causes Updating inaccessible data Data warehousing for investors Usefulness

Royalty Programs and Data Mining
Words: 1186 Length: 3 Document Type: Term Paper

Loyalty Programs Popularity of loyalty programs is increasing, both in terms of the number of programs offered by merchants and in participation by customers. Yet, it seems that both groups remain ill informed of how the programs actually work and the true benefits and costs. This paper explores the reality of loyalty programs and concludes that they can be beneficial for all parties provided that they fully understand what the programs

Business Proposal in Ghana Giam's
Words: 5365 Length: 20 Document Type: Business Proposal

2% of the population is younger than 14; 58.2% is aged between 15 and 64 and 3.6% is over the age of 65. This affect Giam's in a positive way as most of the population is properly aged to work The median age of the population is 20.2 years, with 19.9 years for men and 20.4 years for women The birth rate is of 29.85 births per 1000 individuals The death rate is

Business Ethics Focus on Merrill Lynch According
Words: 4347 Length: 15 Document Type: Essay

Business Ethics Focus on Merrill Lynch According to Laura Hartman and her co-writer, Joe Desjardins in the work entitled "Business Ethics: Decision Making for Personal Integrity & Social Responsibility" philosophical ethics may be clearly differentiated from theological ethics because theological ethics attempted to disseminate the well-being of an individual on a religious basis while the ethics of an individual's philosophy is such that provisions of justifications that can be applied to

Sign Up for Unlimited Study Help

Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.

Get Started Now