Data Mining

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 Agenda

• What is Data Mining?

• Definition
• CRISP-DM
• Modeling Techniques
• How models are built and used?
• Data warehouse Vs Data mining
• Applications Of Data Mining
• Case Study - Telecom

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 What is Data Mining?

• Interactive and iterative process

• To find underlying relationships and features in data
• Knowledge driven
• Enhance the value of existing information resources
• Predicting valuable information
• Data or knowledge discovery
• To predict future trend and behavior

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 Definition

The process of finding previously unknown patterns

and trends in databases and using that information
to build predictive models.

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 CRISP - DM

• CRISP-DM stands for CRoss Industry Standard

Process for Data Mining
• It is a industry and tool neutral data mining process
model
• This Process makes large data mining projects faster,
cheaper and more reliable

Check CRIP-DM’s home page for more details www.crisp-dm.org

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 Phases in CRISP - DM

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 Modeling Techniques

Predictive Models
• Neural Nets
• Rule Induction
• Linear and Logistic Regression

Example
Credit card Company can rate the customer before
issuing Credit card by using the predictive models.
Customer’s applications which are rated low by the
predictive models are rejected.

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 Modeling Techniques

Association Rules
• APPRIORI
• GRI

Example
A leading Super market applies association
techniques in its transaction database and finds out items
which are often purchased together and comes up with
new bundled offer to promote its other non selling items.

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 Modeling Techniques

Clustering Techniques
• Kohonen Networks
• K-Means
• Two Step

Example
A Insurance company groups similar customers
based on various parameters and launches special
promotional offers targeting each segment and achieves
higher response rate.

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 How Models are built and used?

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 Data Mining Process

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 Data Warehouse Vs Data Mining

Data Warehouse Data Mining

Contains historical Process of finding hidden
information stored in the information from large
form of relational database datasets.
which are acquired from
different sources.
Present information can Future information can be
be acquired. predicted.
Provides answers to Provides answers to
questions like questions like
“Who is purchasing our “Who is not purchasing
products?” our products?”

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 Applications of Data Mining

• Market Segmentation

• Customer churn

• Fraud Detection

• Direct Marketing

• Interactive Marketing

• Market basket Analysis

• Trend Analysis

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 Case Study - Telecom

Objective:

To retain the customer base for a telecom company by

creating a model using Neural network algorithm which will
predict which customers are probable churners

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 Case Study - Telecom

Data Preparation
• Use the service usage data which contains summarized
information about present as well as past customers
• Prepare the data by removing missing values and deriving
new fields
• Partition the data as Training and Testing data

• Select only important fields as input fields with respect to

output field

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 Case Study - Telecom

Modeling
• Apply Neural Network Algorithm to Training data and build
the model
• After creating the model apply Testing data in order to verify
the models accuracy

Deployment
• Deploy the final model to the current customer database

• The model Predicts ‘n’ no. of customers are probable

Churners in its current customer database

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 Case Study - Telecom

End Result

The telecom company reacts immediately by sending

lucrative offers through SMS and other means to these
probable churners by then it prevents its customers from
losing to its competitors

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 Finally….

Data mining lets you be Proactive rather than Retrospective

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