Abstract
In today’s business world, the use of computers for everyday business processes and data recording has become virtually ubiquitous. With the advent of this electronic age comes one priceless by-product — data. As more and more executives are discovering each day, companies can harness data to gain valuable insights into their customer base. Data mining is the process used to take these immense streams of data and reduce them to useful knowledge. Data mining has limitless applications, including sales and marketing, customer support, knowledge-base development, not to mention fraud detection for virtually any field, etc. “Data mining,” a bit of a misnomer, refers to mining the data to find the gems hidden inside the data, and as such it is the most often-used reference to this process. It is important to note, however, that data mining is only one part of the Knowledge Discovery in Databases process, albeit it is the workhorse. In this chapter, we provide a concise description of the Knowledge Discovery process, from domain analysis and data selection, to data preprocessing and transformation, to the data mining itself, and finally the interpretation and evaluation of the results as applied to the domain. We describe the different flavors of data mining, including association rules, classification and prediction, clustering and outlier analysis, customer profiling, and how each of these can be used in practice to improve a business’ understanding of its customers. We introduce the reader to some of today’s hot data mining resources, and then for those that are interested, at the end of the chapter we provide a concise technical overview of how each data-mining technology works.