Generally, data mining
(Also called knowledge discovery) is the process of analyzing data from
different perspectives and summarizing it into useful information - information
that can be used to increase revenue, cuts costs, or both. Data mining software
is one of a number of analytical tools for analyzing data. It allows users to
analyze data from many different dimensions or angles, categorize it, and
summarize the relationships identified. Technically, data mining is the process
of finding correlations or patterns among dozens of fields in large relational
databases.
Although data mining is
a relatively new term, the technology is not. Companies have used powerful
computers to sift through volumes of supermarket scanner data and analyze
market research reports for years. However, continuous innovations in computer
processing power, disk storage, and statistical software are dramatically
increasing the accuracy of analysis while driving down the cost.
Example
For
example, one Northindian grocery chain used the data mining capacity of Oracle software
to analyze local buying patterns. They discovered that when men bought diapers
on Thursdays and Saturdays, they also tended to buy beer. Further analysis
showed that these shoppers typically did their weekly grocery shopping on
Saturdays. On Thursdays, however, they only bought a few items. The retailer
concluded that they purchased the beer to have it available for the upcoming
weekend. The grocery chain could use this newly discovered information in
various ways to increase revenue. For example, they could move the beer display
closer to the diaper display. And, they could make sure beer and diapers were
sold at full price on Thursdays.
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