D a t a Science in Business

Chapter 2 — Business Problems

and Data Mining Solutions

Dr. LE SONG THANH QUYNH

Ho Chi Minh City University of Technology

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 Why Data Mining?—Potential Applications

■ Data analysis and decision support

■ Market analysis and management
■
Target marketing, customer relationship management (CRM),
market basket analysis, cross selling, market segmentation
■ Risk analysis and management
■ Forecasting, customer retention, improved underwriting,
quality control, competitive analysis
■ Fraud detection and detection of unusual patterns (outliers)
■ Other Applications
■ Text mining (news group, email, documents) and Web mining
■ Stream data mining
■ Bioinformatics and bio-data analysis

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 Model vs. Pattern

► In data mining, different kinds of relations are expressed in different ways

of representations.
► Representations of relations may be characterized by the distinction of
global models and local patterns.
 Model:  Pattern:
 Make statements only about
 A model is a global restricted regions of the space
summary of a data set spanned by the variables
 Makes statements  Only a few data records may
about any point in the behave in the specified way
full measurement  Example of a simple pattern
space structure:
 Example of a simple

Y= ax+c
model structure:

 Example of a simple  Example of a simple pattern:

𝑦 = 2𝑥 + 3.5
model:
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 Supervised vs. Unsupervised

“Do our customers naturally fall into different groups?”

 no specific target  unsupervised
“Can we find groups of customers who have particularly
high likelihoods of cancelling their service soon after
their contracts expire?”
 specific target  supervised
Supervised and unsupervised tasks require different
techniques
There is no guarantee that unsupervised tasks provide
meaningful results
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 Flat model: labeled data
Supervised data (labeled)

ID color #nuclei #tails status

H1 H2
H1 light 1 1 healthy
H2 dark 1 1 healthy
H3 H4
H3 light 1 2 healthy
H4 light 2 1 healthy
C1 C2
C1 dark 1 2 cancerous
C2 dark 2 1 cancerous
C3 C4
C3 light 2 2 cancerous
C4 dark 2 2 cancerous

Descriptive attributes Class attribute

Color: {dark, light}, #nuclei: {1, 2}, #tails: {1, 2} Status {cancerous, healthy}
 Flat model: unlabeled data
Unsupervised data (unlabeled)

ID color #nuclei #tails status

H1 H2
H1 light 1 1 healthy
H2 dark 1 1 healthy
H3 H4
H3 light 1 2 healthy
H4 light 2 1 healthy
C1 C2
C1 dark 1 2
C2 dark 2 1 cancero
C3 C4
C3 light 2 2 us
C4 dark 2 2 cancero
us

Descriptive attributes cancero

Color: {dark, light}, #nuclei: {1, 2}, #tails: {1, 2} us
cancero
From business problems to data mining tasks

 Datamining is a process with well-understood

stages based on
 application of information technology
 analyst‘s creativity
 business knowledge
 common sense

 We look at typical tasks and examples, then at the

process

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From business problems to data mining tasks

 Decompose a data analytics problem into pieces

such that you can solve a known task with a tool

 There is a large number of data mining algorithms

available, but only a limited number of data mining
tasks

 We will illustrate the fundamental concepts

based on
 Classification: phân nhóm dữ liệu
 Regression: hồi quy
 ............................... 6
From business problems to data mining tasks

Classification
 Classificationattempts to predict, for each individual in a
population, which of a (small) set of classes that
individual belongs to

 “Among all the customers of a cellphone company,

which are likely to correspond to a given offer?”

 Classification algorithms provide models that determine

which class a new individual belongs to

 Classification is related to scoring

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From business problems to data mining tasks

Regression

 Regression (value estimation) attempts to estimate or

predict, for each individual, the numerical value for that
individual

 “How much will a given customer use the service?”

 Predicted variable: service usage

 Generate regression model by looking at other, similar

individuals in the population

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From business problems to data mining tasks

Similarity matching

 Similarity matching attempts to identify similar

individuals based on the data known about the
individuals

 Find similar entitites

 Basis for making product recommendations

 Find people who are similar to you in terms of the
products they have liked or purchased
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From business problems to data mining tasks

Clustering
 Clustering attempts to group individuals in a
population together by their similarity, but without
regard to any specific purpose

 Do customers form natural groups or segments?

 Result: groupings of the individuals of a population

 Useful in preliminary domain exploration

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From business problems to data mining tasks

Co-occurence grouping

Attempts to find associations between entities based on

transactions involving them aka association rules or market-
basket analysis
“What items are commonly purchased together?”
Considers similarity of objects based on their appearing together
in transactions
Included in recommendation systems (people who bought X also
bought Y)
Result: a description of items that occur together

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 Transactional databases

 A transactional database consists of a file where

each record represents a transaction.
 A transaction typically includes a unique transaction
identity number (trans_ID), and list of the items
making up the transaction.

Trans_ID list of item_ID

T10 beer, cake,

0 onigiri beer,
T20 cake
0 beer,
T30 onigiri
0 beer,
T40 onigiri 12
From business problems to data mining tasks

 Classification
and regression are generally solved
with supervised techniques

 Clustering, co-occurence grouping, and profiling

are generally unsupervised

 Similarity matching and link prediction could be

either

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Data mining and its use

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 Ex. 1: Market Analysis and
Management
■ Where does the data come from?—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
■ Cross-market analysis—Find associations/co-relations between product
sales, & predict based on such association
■ Customer profiling—What types of customers buy what products (clustering or
classification)
■ Customer requirement analysis
■ Identify the best products for different groups of customers
■ Predict what factors will attract new customers
■ Provision of summary information
■ Multidimensional summary reports
■ Statistical summary information (data central tendency and variation)
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Ex. 2: Corporate Analysis & 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

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 Ex. 3: Fraud Detection & Mining Unusual
Patterns
■ Approaches: Clustering & model construction for frauds, outlier analysis
■ Applications: Health care, retail, credit card service, telecomm.
■ Auto insurance: ring of collisions
■
Money laundering: suspicious monetary transactions
■
Medical insurance
■ Professional patients, ring of doctors, and ring of references
■ Unnecessary or correlated screening tests
■ Telecommunications: phone-call fraud
■ Phone call model: destination of the call, duration, time of day or
week. Analyze patterns that deviate from an expected norm
■ Retail industry
■ Analysts estimate that 38% of retail shrink is due to dishonest
employees
■ Anti-terrorism

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 KDD Process: Several Key
Steps
■ Learning the application domain
■ relevant prior knowledge and goals of application
■ Creating a target data set: data selection
■ Data cleaning and preprocessing: (may take 60% of effort!)
■ Data reduction and transformation
■ Find useful features, dimensionality/variable reduction, invariant
representation
■ Choosing functions of data mining
■ summarization, classification, regression, association, clustering
■ Choosing the mining algorithm(s)
■ Data mining: search for patterns of interest
■ Pattern evaluation and knowledge presentation
■ visualization, transformation, removing redundant patterns, etc.
■ Use of discovered knowledge
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 Bài tập cá nhân số 2 – 27/09/2024

Với 3 ví dụ về các vấn đề liên quan đến data mining mà

học viên đã nêu trong bài tập cá nhân số 1, học viên
hãy phân loại và làm rõ các nội dung sau:
a) Bài toán thuộc dạng Supervised or Unsupervised
b) Liệt kê cụ thể các input data và output data (nếu có)
cần phải thu thập
c) Mô tả cụ thể “kiến thức kỳ vọng” mà bạn muốn đạt
được sau khi áp dụng data mining giải quyết vấn đề
 Are All the “Discovered” Patterns
Interesting?
■ Data mining may generate thousands of patterns: Not all of them are
interesting
■ Suggested approach: Human-centered, query-based, focused mining
■ Interestingness measures
■ A pattern is interesting if it is easily understood by humans, valid on new
or test data with some degree of certainty, potentially useful, novel, or
validates some hypothesis that a user seeks to confirm
■ Objective vs. subjective interestingness measures
■ Objective: based on statistics and structures of patterns, e.g., support,
confidence, etc.
■ Subjective: based on user’s belief in the data, e.g., unexpectedness,
novelty, actionability, etc.

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Find All and Only Interesting Patterns?

■ Find all the interesting patterns: Completeness

■ Can a data mining system find all the interesting patterns? Do we
need to find all of the interesting patterns?
■ Heuristic vs. exhaustive search
■ Association vs. classification vs. clustering
■ Search for only interesting patterns: An optimization problem
■ Can a data mining system find only the interesting patterns?
■ Approaches
■
First general all the patterns and then filter out the uninteresting
ones
■
Generate only the interesting patterns—mining query
optimization
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 Other Pattern Mining Issues
■ Precise patterns vs. approximate patterns
■ Association and correlation mining: possible find sets of precise
patterns
■
But approximate patterns can be more compact and sufficient
■ How to find high quality approximate patterns??
■ Gene sequence mining: approximate patterns are inherent
■ How to derive efficient approximate pattern mining
algorithms??
■ Constrained vs. non-constrained patterns
■ Why constraint-based mining?
■ What are the possible kinds of constraints? How to push
constraints into the mining process?

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 Why Data Mining Query Language?

■ Automated vs. query-driven?

■ Finding all the patterns autonomously in a database?—unrealistic
because the patterns could be too many but uninteresting
■ Data mining should be an interactive process
■ User directs what to be mined
■ Users must be provided with a set of primitives to be used to
communicate with the data mining system
■ Incorporating these primitives in a data mining query
language
■ More flexible user interaction

■ Foundation for design of graphical user interface

■ Standardization of data mining industry and practice

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Primitives that Define a Data Mining Task

■ Task-relevant data
■ Database or data warehouse name
■ Database tables or data warehouse cubes
■ Condition for data selection
■ Relevant attributes or dimensions
■ Data grouping criteria
■ Type of knowledge to be mined
■ Characterization, discrimination, association, classification,
prediction, clustering, outlier analysis, other data mining tasks
■ Background knowledge
■ Pattern interestingness measurements
■ Visualization/presentation of discovered patterns
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 Primitive 3: Background Knowledge

■ A typical kind of background knowledge: Concept hierarchies

■ Schema hierarchy
■ E.g., street < city < province_or_state < country
■ Set-grouping hierarchy
■ E.g., {20-39} = young, {40-59} = middle_aged
■ Operation-derived hierarchy
■ email address: [email protected]
login-name < department < university < country
■ Rule-based hierarchy
■ low_profit_margin (X) <= price(X, P1) and cost (X, P2) and (P1 - P2)
<
$50
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Primitive 4: Pattern Interestingness Measure

■ Simplicity
e.g., (association) rule length, (decision) tree size
■ Certainty
e.g., confidence, P(A|B) = #(A and B)/ #(B), classification
reliability or accuracy, certainty factor, rule strength, rule quality,
discriminating weight, etc.
■ Utility
potential usefulness, e.g., support (association), noise
threshold (description)
■ Novelty
not previously known, surprising (used to remove redundant
rules, e.g., Illinois vs. Champaign rule implication support ratio)

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Primitive 5: Presentation of Discovered Patterns

■ Different backgrounds/usages may require different forms of

representation
■ E.g., rules, tables, crosstabs, pie/bar chart, etc.
■ Concept hierarchy is also important
■ Discovered knowledge might be more understandable when
represented at high level of abstraction
■ Interactive drill up/down, pivoting, slicing and dicing provide
different perspectives to data
■ Different kinds of knowledge require different representation:
association, classification, clustering, etc.

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 DMQL—A Data Mining Query
Language

■ Motivation
■ A DMQL can provide the ability to support ad-hoc and
interactive data mining
■ By providing a standardized language like SQL
■
Hope to achieve a similar effect like that SQL has on
relational database
■
Foundation for system development and evolution
■
Facilitate information exchange, technology transfer,
commercialization and wide acceptance
■ Design
■ DMQL is designed with the primitives described earlier

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An Example Query in DMQL

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 Other Data Mining Languages &
Standardization Efforts
■ Association rule language specifications
■ MSQL (Imielinski & Virmani’99)
■ MineRule (Meo Psaila and Ceri’96)
■ Query flocks based on Datalog
syntax (Tsur et al’98)
■ OLEDB for DM (Microsoft’2000) and recently DMX (Microsoft
SQLServer 2005)
■ Based on OLE, OLE DB, OLE DB for OLAP, C#
■ Integrating DBMS, data warehouse and data mining
■ DMML (Data Mining Mark-up Language) by DMG (www.dmg.org)
■ Providing a platform and process structure for effective data mining
■ Emphasizing on deploying data mining technology to solve business
problems

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 Integration of Data Mining and Data
Warehousing
■ Data mining systems, DBMS, Data warehouse systems
coupling
■ No coupling, loose-coupling, semi-tight-coupling, tight-coupling
■ On- line analytical mining data
■ integration of mining and OLAP technologies
■ Interactive mining multi- level knowledge
■ Necessity of mining knowledge and patterns at different levels of
abstraction by drilling/rolling, pivoting, slicing/dicing, etc.
■ Integration of multiple mining functions
■ Characterized classification, first clustering and then association
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 Coupling Data Mining with DB/DW
Systems
■ No coupling—flat file processing, not recommended
■ Loose coupling
■ Fetching data from DB/DW
■ Semi-tight coupling—enhanced DM performance
■ Provide efficient implement a few data mining primitives in a
DB/DW system, e.g., sorting, indexing, aggregation, histogram
analysis, multiway join, precomputation of some stat functions
■ Tight coupling—A uniform information processing
environment
■ DM is smoothly integrated into a DB/DW system, mining query
is optimized based on mining query, indexing, query processing
methods, etc.
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Architecture: Typical Data Mining
System

Graphical User Interface

Pattern Evaluation
Knowl
Data Mining Engine edge-
Base
Database or Data
Warehouse Server

data cleaning, integration, and selection

Database Data World-Wide Other Info

Warehouse Web Repositories

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