Data mining

Introduction to Data Mining

Last Updated : 17 Apr, 2023

Data mining is the process of extracting useful information from large sets of data. It involves
using various techniques from statistics, machine learning, and database systems to identify
patterns, relationships, and trends in the data. This information can then be used to make data-
driven decisions, solve business problems, and uncover hidden insights. Applications of data
mining include customer profiling and segmentation, market basket analysis, anomaly
detection, and predictive modeling. Data mining tools and technologies are widely used in
various industries, including finance, healthcare, retail, and telecommunications.

In general terms, “Mining” is the process of extraction of some valuable material from the earth
e.g. coal mining, diamond mining, etc. In the context of computer science, “Data Mining” can
be referred to as knowledge mining from data, knowledge extraction, data/pattern analysis,
data archaeology, and data dredging. It is basically the process carried out for the extraction of
useful information from a bulk of data or data warehouses. One can see that the term itself is a
little confusing. In the case of coal or diamond mining, the result of the extraction process is
coal or diamond. But in the case of Data Mining, the result of the extraction process is not
data!! Instead, data mining results are the patterns and knowledge that we gain at the end of
the extraction process. In that sense, we can think of Data Mining as a step in the process of
Knowledge Discovery or Knowledge Extraction.

Gregory Piatetsky-Shapiro coined the term “Knowledge Discovery in Databases” in 1989.

Nowadays, data mining is used in almost all places where a large amount of data is stored and
processed. For example, banks typically use ‘data mining’ to find out their prospective
customers who could be interested in credit cards, personal loans, or insurance as well. Since
banks have the transaction details and detailed profiles of their customers, they analyze all this
data and try to find out patterns that help them predict that certain customers could be
interested in personal loans, etc.

Main Purpose of Data Mining

Basically, Data mining has been integrated with many other techniques from other domains
such as statistics, machine learning, pattern recognition, database and data warehouse
systems, information retrieval, visualization, etc. to gather more information about the data
and to helps predict hidden patterns, future trends, and behaviors and allows businesses to
make decisions.

Technically, data mining is the computational process of analyzing data from different
perspectives, dimensions, angles and categorizing/summarizing it into meaningful information.

Data Mining can be applied to any type of data e.g. Data Warehouses, Transactional Databases,
Relational Databases, Multimedia Databases, Spatial Databases, Time-series Databases,
World Wide Web.

Data Mining as a Whole Process

The whole process of Data Mining consists of three main phases:

1. Data Pre-processing – Data cleaning, integration, selection, and transformation takes

2. Data Extraction – Occurrence of exact data mining

In future articles, we will cover the details of each of these phases.

Applications of Data Mining

1. Financial Analysis

2. Biological Analysis

3. Scientific Analysis

4. Intrusion Detection

5. Fraud Detection

6. Research Analysis

Benefits of Data Mining

1. Improved decision-making: Data mining can provide valuable insights that can help
organizations make better decisions by identifying patterns and trends in large data sets.

2. Increased efficiency: Data mining can automate repetitive and time-consuming tasks,
such as data cleaning and preparation, which can help organizations save time and
resources.
 3. Enhanced competitiveness: Data mining can help organizations gain a competitive edge
by uncovering new business opportunities and identifying areas for improvement.

4. Improved customer service: Data mining can help organizations better understand their
customers and tailor their products and services to meet their needs.

5. Fraud detection: Data mining can be used to identify fraudulent activities by detecting
unusual patterns and anomalies in data.

6. Predictive modeling: Data mining can be used to build models that can predict future
events and trends, which can be used to make proactive decisions.

7. New product development: Data mining can be used to identify new product
opportunities by analyzing customer purchase patterns and preferences.

8. Risk management: Data mining can be used to identify potential risks by analyzing data
on customer behavior, market conditions, and other factors.

Real-Life Examples of Data Mining

Market Basket Analysis: It is a technique that gives the careful study of purchases done by a
customer in a supermarket. The concept is basically applied to identify the items that are
bought together by a customer. Say, if a person buys bread, what are the chances that he/she
will also purchase butter? This analysis helps in promoting offers and deals by the companies.
The same is done with the help of data mining.

Protein Folding: It is a technique that carefully studies biological cells and predicts the protein
interactions and functionality within biological cells. Applications of this research include
determining causes and possible cures for Alzheimer’s, Parkinson’s, and cancer caused by
Protein misfolding.

Fraud Detection: Nowadays, in this land of cell phones, we can use data mining to analyze cell
phone activities for comparing suspicious phone activity. This can help us to detect calls made
on cloned phones. Similarly, with credit cards, comparing purchases with historical purchases
can detect activity with stolen cards.

Data mining also has many successful applications, such as business intelligence, Web search,
bioinformatics, health informatics, finance, digital libraries, and digital governments.