When you have a large amount of information at hand and you need to find something in particular, what options do you have? Either you read through all the information that is available and find what you are looking for, else you look out for ways to sort through for what you want. Data mining is the sorting of data according to your needs.
What happens here is that you look for patterns in a large volume of data, about what you require. In other words, it means searching for knowledge that you seek in all the available information. This is a very powerful technology, which is very popular as well as necessary in today's competitive world. The advantages of data mining in different fields are given in the paragraphs below.
Basically, data mining is all about processing information and recognizing patterns of the same, which we intend to seek from the vast sea of knowledge. To explain with a simple example, let's say, you have a lot of recipes in hand, and you are unable to choose any for your needs. Applying the mining technique, we can sort this information according to the different cuisines, say Italian, Mexican, Indian, Chinese, etc. The sorting category can also be according to breakfast, lunch, and dinner. Or you could divide the recipes country-wise, and within these, you can have further categories, like breakfast and lunch.
This is with relatively small amount of information; with large amounts, a number of tools are used to mine the facts. In order to make this happen, there are a lot of computational techniques, like statistics and recognition of the patterns, which are to be used. Many algorithms are designed in order to sort out the correct information from a huge warehouse or database. Programmers have come out with different software as well, which help organizations.
As mentioned, a number of techniques are used for the sorting purpose. Some of these include
- Decision Trees
- Long-term Processing
- Sequential Patterns
- Efficient Decision-Making
- Detection of Fraud
- Market Research and Analysis
- Predicting future trends
- Increasing overall revenue
This technology is very useful for the various financial institutions, like banks and credit companies. It helps for information on loans and to know about the credit worthiness of the clients. It aids the credit card companies in providing the details regarding frauds. Thus, it helps the financial institutions in reducing their losses.
The marketing and the retailing industry depends on the current market trends that are followed by the customers. This technique helps these industries to find the correct trends through market research. This, in turn, helps them in deciding their marketing strategies. It is also useful in predicting the trends and products that the customers would be interested in. This helps the companies to decide what kind of products to introduce in the market and when to do so.
The retailers can also benefit, as they know from the customer trends which products can be sold at a discount and which products are in demand. Thus, it is ensured that the customers get good products.
Customer Relationship Management
Being able to ensure good customer relationship management is one of the several benefits of this technology. It helps the business people to find out which type of customers to approach with what sort of products. This ensures sale of the product and not pitching of the product. This helps in selling the products and in increasing the satisfaction of the customers, which increases the customer base. It also helps the businesses in deciding different marketing strategies according to the customers in a particular region and according to the customers of a particular type.
In this field, this sorting method helps in the various research projects. Other than that, it has also contributed to the medical and engineering tremendously, in improving their processes and making their systems highly accurate and efficient.
The law enforcement is helped by this technique by monitoring the behavior patterns of the criminals, which makes it easier for the criminals to be caught.
With the help of this method, organizations are in a better position to predict the future regarding the business trends, the possible amount of revenue that could be generated, the orders that could be expected, and the type of customers that could be approached. The traditional approaches will not be able to generate such accurate results, as they use simpler algorithms. This technique helps the businesses to grow, helps the customers be happy, and helps in a lot of other areas, like data management. The issue of privacy and security is violated here, and hence, this point is still being worked upon. However, due to so many benefits, it is considered a boon.