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This document introduces data mining and discusses its importance and applications. It describes how data volumes have exploded in recent years and how data mining can extract useful knowledge from massive amounts of data. The document then covers what data mining is, the data mining process, different types of data that can be mined, and examples of how data mining can be used for market analysis, risk analysis, fraud detection and other applications.

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0% found this document useful (0 votes)
14 views22 pages

DM 1

This document introduces data mining and discusses its importance and applications. It describes how data volumes have exploded in recent years and how data mining can extract useful knowledge from massive amounts of data. The document then covers what data mining is, the data mining process, different types of data that can be mined, and examples of how data mining can be used for market analysis, risk analysis, fraud detection and other applications.

Uploaded by

areebaariba745
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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You are on page 1/ 22

Data Mining & Warehousing

Chapter 1. Introduction

Data Warehousing/Mining
Chapter 1. Introduction

 Motivation: Why data mining?


 What is data mining?
 Data Mining: On what kind of data?
 Data mining functionality
 Are all the patterns interesting?
 Classification of data mining systems
 Major issues in data mining

Data Warehousing/Mining
• 1 Zeta byte = 1
trillion Gigabytes.

• 5,200 GB of data
for every
person on
Earth.

Data Warehousing/Mining 3
Why Data Mining?
• The Explosive Growth of Data: from terabytes to petabytes
• Data collection and data availability
• Automated data collection tools, database systems, Web, computerized
society
• Major sources of abundant data
• Business: Web, e-commerce, transactions, stocks, …
• Science: Remote sensing, bioinformatics, scientific simulation, …
• Society and everyone: news, digital cameras, YouTube, social media,
mobile devices, …
• We are drowning in data, but starving for knowledge!
• “Necessity is the mother of invention”—Data mining—Automated analysis of
massive data sets
• Mine the knowledge from data
Data Warehousing/Mining 4
Example of Data
Volumes

https://www.eecis.udel.edu/~amer/Table-Kilo-Mega-Giga---YottaBytes.html

Data Warehousing/Mining 17
Evolution of Database Technology

 1960s:
– Data collection, database creation, IMS and network DBMS
 1970s:
– Relational data model, relational DBMS implementation
 1980s:
– RDBMS, advanced data models (extended-relational, OO,
deductive, etc.) and application-oriented DBMS (spatial,
scientific, engineering, etc.)
 1990s—2000s:
– Data mining and data warehousing, multimedia databases, and
Web databases

Data Warehousing/Mining
Data Mining: On What Kind of
Data?
 Relational databases
 Data warehouses
 Transactional databases
 Advanced DB and information repositories
– Object-oriented and object-relational databases
– Spatial databases
– Time-series data and temporal data
– Text databases and multimedia databases
– Heterogeneous and legacy databases
– WWW

Data Warehousing/Mining
What Is Data Mining?
 Data mining (knowledge discovery in databases):

– Extraction of interesting (non-trivial, implicit, previously


unknown and potentially useful) information or patterns
from data in large databases
 Alternative names and their “inside stories”:
– Data mining: a misnomer?
– Knowledge discovery(mining) in databases (KDD),
knowledge extraction, data/pattern analysis, data
archeology, data dredging, information harvesting,
business intelligence, etc.
 What is not data mining?
– (Deductive) query processing.
– Expert systems or small machine learning/
statistical programs
Data Warehousing/Mining
Data Mining: A Knowledge Discovery in
Databases (KDD) Process
Pattern Evaluation
– Data mining: the core of
knowledge discovery process.
Data Mining

Task-relevant Data

Data Warehouse Selection

Data Cleaning

Data Integration

Databases
Data Warehousing/Mining
7 Data Mining Steps
 1. Data cleaning – remove noise and
inconsistent data
 2. Data integration – combine multiple
sources
 3. Data selection – retrieve from the
database data relevant to the analysis task
 4. Data transformation – data are
transformed or consolidated into forms
appropriate for mining (e.g. performing
summary or aggregation operations)

Data Warehousing/Mining 1
7 Data Mining Steps (continued)

 5. Data mining – intelligent methods are


applied to extract data patterns
 6. Pattern evaluation – identify truly
interesting patterns representing knowledge
based on some interestingness measures
 7. Knowledge presentation – present mined
knowledge to the user

Data Warehousing/Mining 1
Data Mining: Classification Schemes

 General functionality
– Descriptive data mining
– Predictive data mining
 Different views, different classifications
– Kinds of databases to be mined
– Kinds of knowledge to be discovered
– Kinds of techniques utilized
– Kinds of applications adapted

Data Warehousing/Mining 1
Why Data Mining? — Potential
Applications
 Database analysis and decision support
– Market analysis and management
 target marketing, customer relation management, market basket
analysis, cross selling, market segmentation
– Risk analysis and management
 Forecasting, customer retention, improved underwriting, quality
control, competitive analysis
– Fraud detection and management
 Other Applications
– Text mining (news group, email, documents) and Web analysis.
– Intelligent query answering

Data Warehousing/Mining 1
Market Analysis and Management (1)

 Where are the data sources for analysis?


– Credit card transactions, loyalty cards, discount coupons,
customer complaint calls, plus (public) lifestyle studies
 Target marketing
– Find clusters of “model” customers who share the same
characteristics: interest, income level, spending habits, etc.
 Determine customer purchasing patterns over time
– Conversion of single to a joint bank account: marriage, etc.
 Cross-market analysis
– Associations/co-relations between product sales
– Prediction based on the association information
Data Warehousing/Mining 1
Market Analysis and Management (2)

 Customer profiling
– data mining can tell you what types of customers buy what
products (clustering or classification)
 Identifying customer requirements
– identifying the best products for different customers
– use prediction to find what factors will attract new customers
 Provides summary information
– various multidimensional summary reports
– statistical summary information (data central tendency and
variation)
Data Warehousing/Mining 1
Corporate Analysis and Risk
Management
 Finance planning and asset evaluation
– cash flow analysis and prediction
– contingent claim analysis to evaluate assets
– cross-sectional and time series analysis (financial-ratio, trend
analysis, etc.)
 Resource planning:
– summarize and compare the resources and spending
 Competition:
– monitor competitors and market directions
– group customers into classes and a class-based pricing
procedure
– set pricing strategy in a highly competitive market

Data Warehousing/Mining 1
Fraud Detection and Management (1)

 Applications
– widely used in health care, retail, credit card services,
telecommunications (phone card fraud), etc.
 Approach
– use historical data to build models of fraudulent behavior and
use data mining to help identify similar instances
 Examples
– auto insurance: detect a group of people who stage accidents to
collect on insurance
– money laundering: detect suspicious money transactions (US
Treasury's Financial Crimes Enforcement Network)
– medical insurance: detect professional patients and ring of
doctors and ring of references
Data Warehousing/Mining 1
Fraud Detection and Management (2)
 Detecting inappropriate medical treatment
– Australian Health Insurance Commission identifies that in many
cases blanket screening tests were requested (save Australian
$1m/yr).
 Detecting telephone fraud
– Telephone call model: destination of the call, duration, time of
day or week. Analyze patterns that deviate from an expected
norm.
– British Telecom identified discrete groups of callers with
frequent intra-group calls, especially mobile phones, and broke
a multimillion dollar fraud.
 Retail
– Analysts estimate that 38% of retail shrink is due to dishonest
employees.
Data Warehousing/Mining 1
Other Applications

 Sports
– IBM Advanced Scout analyzed NBA game statistics (shots
blocked, assists, and fouls) to gain competitive advantage for
New York Knicks and Miami Heat
 Astronomy
– JPL and the Palomar Observatory discovered 22 quasars with
the help of data mining
 Internet Web Surf-Aid
– IBM Surf-Aid applies data mining algorithms to Web access
logs for market-related pages to discover customer preference
and behavior pages, analyzing effectiveness of Web marketing,
improving Web site organization, etc.
Data Warehousing/Mining 1
Major Issues in Data Mining (1)

 Mining methodology and user interaction


– Mining different kinds of knowledge in databases
– Interactive mining of knowledge at multiple levels of abstraction
– Incorporation of background knowledge
– Data mining query languages and ad-hoc data mining
– Expression and visualization of data mining results
– Handling noise and incomplete data
– Pattern evaluation: the interestingness problem
 Performance and scalability
– Efficiency and scalability of data mining algorithms
– Parallel, distributed and incremental mining methods

Data Warehousing/Mining 2
Major Issues in Data Mining (2)

 Issues relating to the diversity of data types


– Handling relational and complex types of data
– Mining information from heterogeneous databases and global
information systems (WWW)
 Issues related to applications and social impacts
– Application of discovered knowledge
 Domain-specific data mining tools
 Intelligent query answering
 Process control and decision making
– Integration of the discovered knowledge with existing
knowledge: A knowledge fusion problem
– Protection of data security, integrity, and privacy

Data Warehousing/Mining 2
Summary

 Data mining: discovering interesting patterns from large amounts of


data
 A natural evolution of database technology, in great demand, with
wide applications
 A KDD process includes data cleaning, data integration, data
selection, transformation, data mining, pattern evaluation, and
knowledge presentation
 Mining can be performed in a variety of information repositories
 Data mining functionalities: characterization, discrimination,
association, classification, clustering, outlier and trend analysis, etc.
 Classification of data mining systems
 Major issues in data mining
Data Warehousing/Mining 2

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