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What is the use of data mining in business sectors?
Data mining also defined as Knowledge Discovery in Data is a technique to recognize any anomalies, correlations, trends, or patterns between millions of data (especially structured data) to glean insights that can be useful for business decision making and might have been missed during traditional analysis. The objective of data mining is to find facts or data that was previously ignored or not known using complicated numerical algorithms.
Data Mining is similar to Data Science. It is carried out by a person, in a particular situation, on a specific data set, with an objective. This phase contains several types of services including text mining, web mining, audio and video mining, pictorial data mining, and social media mining. It is completed through software that is simple or greatly specific.
By outsourcing data mining, all the work can be done quicker with low operation costs. Specific firms can also use new technologies to save data that is impossible to find manually. There are tonnes of data available on multiple platforms, but very limited knowledge is accessible.
The major challenge is to analyze the data to extract essential data that can be used to solve an issue or for company development. There are many dynamic instruments and techniques available to mine data and discover better judgment from it.
Data mining is used for several purposes in both the private and public sectors. Industries including banking, insurance, medicine, and retailing generally use data mining to decrease costs, enhance research, and increase sales.
The insurance and banking industries use data mining applications to discover fraud and assist in risk assessment such as credit scoring.
Companies can establish models through the database collected by them over various years that predict whether a user is a good credit risk, or whether an accident claim is fraudulent and must be investigated more intently.
The medical community uses data mining to predict the effectiveness of a procedure or medicine.
Pharmaceutical firms use data mining of chemical compounds and genetic material to help research new treatments for diseases.
Retailers can use data collected through affinity programs (for instance, shoppers club cards, frequent flyer points, contests) to assess the effectiveness of product selection and placement decisions, coupon offers, and which products are often purchased together.
Telecommunication service providers and music clubs can use data mining to generate a 'churn analysis,' to assess which users are likely to remain as subscribers and which ones are likely to switch to a competitor.
In the public sector, data mining applications were originally used as a means to detect fraud and waste, but they have grown also to be used for purposes including measuring and enhancing program performance.
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