Data Mining is frequently described as “the process of extracting valid, authentic, and actionable information from large databases.” In other words, data mining derives patterns and trends that exist in data. These patterns and trends can be collected together and defined as a mining model. Mining models can be applied to specific business scenarios. You can use data mining to answer questions such as:
- What will customers buy? What products sell together?
- How can a company predict which customers are at risk for churning?
- Where has the marketplace been, and where is it going?
- How can a business best analyze its Web site usage patterns?
- How can an organization determine the success of a marketing campaign?
- How can businesses prevent poor quality data from entering the system?
- What are the best techniques for analyzing unstructured data, such as free-form text?
Applications of Data Mining in Retail:
- Fraud Detection
- Market Basket Analysis
- Sales Forecasting
- Database Marketing
- Merchandize Planning and Allocation