What makes data mining an important tool for companies? How does data mining provide information? In which case would you advise an enterprise to use data mining?
Data is a big business property which offers important information which can have a huge impact on how the enterprise operates and how it interacts and gains competitiveness with current and future customers. Data mining is the use of automated procedures to collect information currently unknown from large databases using different standards which allow patterns and relationships to be discovered. This newly obtained information can be used in forecast, assessment support, projection and approximation in order to make business choices that can give a company the competitive edge (Ahmed, 2004). This paper seeks to discuss the importance of data mining in as a business tool.
The process of date mining yields five main types of information: Associations, sequences, classification, clustering and forecasting (Ahmed, 2004). Associations occur when a single event is linked to many occurrences. For example, If milk is bought in a store, 50% of the time coffee is also bought unless a promotion is there whereby coffee is purchased 78% of the time. In sequences, time is the main factor. For example, if a television is bought, 67% of the time, a DVD player will be bought within a month and 75% of the time a digital satellite decoder will be bought in a week. Classification helps to discover customers who might go away and models how to identify them. It also helps you discover which promotion keeps which type of customers and therefore informs the level of spending used in retaining certain customers. Clustering discerns different groupings within the data. This can be useful in different areas that may include detecting manufacturing defects or identifying groups of customers that have a liking for bank cards. Forecasting estimates the forthcoming significance of continuous variables such as sales statistics based on the arrays found in the data. All this information is crucial in supporting a business in various ways.
In conclusion, data mining would be recommended for a firm that is keen to increase customer satisfaction by providing the finest, safest and beneficial products at rational and cost-effective prices. Through provision and utilization of information on the five levels of association, sequence, classification, clustering and forecasting, the business will become more competitive and profitable. In my view, therefore, business mining is a tool needed by any business in order to succeed.
References
Ahmed, S. (2004). Applications of Data Mining in Retail Business. In International Conference on Information Technology: Coding and Computing (pp. 455-459). Las Vegas, NV, USA: IEEE. Retrieved from http://ieeexplore.ieee.org/stamp/stamp.jsp?tp=&arnumber=1286695&isnumber=28683
