Data Mining Concepts

By:
Nithin Bhaktha H
4NM07CS073
NMAMIT, Nitte
What is Data Mining?

 Data mining:
 Extraction of interesting (non-trivial, implicit,
previously unknown and potentially useful)
information or patterns from data in large
databases

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Multidisciplinary
Statistics
Pattern Neurocomputing
Recognition

Machine
Data Mining Learning AI

Databases
KDD

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Data Warehouse

•Data warehousing is defined as a process of

centralized data management and retrieval.

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Understanding the term Data Warehousing

 Data Warehouse:
The term Data Warehouse was coined by Bill Inmon in 1990, which
he defined in the following way: "A warehouse is a subject-oriented,
integrated, time-variant and non-volatile collection of data in support
of management's decision making process". He defined the terms in
the sentence as follows:
 Subject Oriented:
Data that gives information about a particular subject instead of
about a company's ongoing operations.
 Integrated:
Data that is gathered into the data warehouse from a variety of
sources and merged into a coherent whole.
 Time-variant:
All data in the data warehouse is identified with a particular time
period.
 Non-volatile
Data is stable in a data warehouse. More data is added but data is
never removed. This enables management to gain a consistent
picture of the business.
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What can DM do?

 Blockbuster Entertainment mines its video

rental history database to recommend
rentals to individual customers.

 American Express can suggest products to its

cardholders based on analysis of their
monthly expenditures.

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 Data Mining: A KDD Process

Pattern Evaluation
 Data mining: the core of
knowledge discovery process.
Data Mining

Task-relevant Data
Data Selection
Data Preprocessing
Data Warehouse

Data Cleaning
Data Integration

Databases
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 Steps of a KDD Process

 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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Data Mining and Business Intelligence

Increasing potential
to support
business decisions End User
Making
Decisions

Data Presentation Business

Analyst
Visualization Techniques
Data Mining Data
Information Discovery Analyst

Data Exploration
Statistical Analysis, Querying and Reporting
Data Warehouses / Data Marts
OLAP, MDA DBA
Data Sources
Paper, Files, Information Providers, Database Systems, OLTP
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Data Mining Techniques

 Classification
 Clustering
 Mining Associations
 Sequential Pattern Discovery

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Classification: Definition
 Given a collection of records (training set )
 Each record contains a set of attributes, one of the
attributes is the class.
 Find a model for class attribute as a function of the
values of other attributes.
 Goal: previously unseen records should be assigned
a class as accurately as possible.
 A test set is used to determine the accuracy of the
model. Usually, the given data set is divided into
training and test sets, with training set used to
build the model and test set used to validate it.
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 Classification Example
l l us
ir ca ir ca o
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ca ca co c l a
Tid Refund Marital Taxable Refund Marital Taxable
Status Income Cheat Status Income Cheat

1 Yes Single 125K No No Single 75K ?

2 No Married 100K No Yes Married 50K ?
3 No Single 70K No No Married 150K ?
4 Yes Married 120K No Yes Divorced 90K ?
5 No Divorced 95K Yes No Single 40K ?
6 No Married 60K No No Married 80K ? Test
10

Set
7 Yes Divorced 220K No
8 No Single 85K Yes
9 No Married 75K No
Training
Learn
10
10 No Single 90K Yes
Set Classifier Model

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Classification: Application

 Direct Marketing
 Goal: Reduce cost of mailing by targeting a set of
consumers likely to buy a new cell-phone product.
 Approach:
▪ Use the data for a similar product introduced before.
▪ We know which customers decided to buy and which decided
otherwise. This {buy, don’t buy} decision forms the class attribute.
▪ Collect various demographic, lifestyle, and company-interaction
related information about all such customers.
▪ Type of business, where they stay, how much they earn, etc.
▪ Use this information as input attributes to learn a classifier model.

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Classification: Application 2

 Fraud Detection
 Goal: Predict fraudulent cases in credit card transactions.
 Approach:
▪ Use credit card transactions and the information on its account-
holder as attributes.
▪ When does a customer buy, what does he buy, how often he pays on
time, etc
▪ Label past transactions as fraud or fair transactions. This forms the
class attribute.
▪ Learn a model for the class of the transactions.
▪ Use this model to detect fraud by observing credit card transactions
on an account.

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Classification Example

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Clustering Definition

 Given a set of data points, each having a set of

attributes, and a similarity measure among them,
find clusters such that
 Data points in one cluster are more similar to one another.
 Data points in separate clusters are less similar to one
another.
 Similarity Measures:
 Euclidean Distance if attributes are continuous.
 Other Problem-specific Measures.

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Illustrating Clustering

 Euclidean Distance Based Clustering in 3-D space.

Intracluster
Intraclusterdistances
distances Intercluster
Interclusterdistances
distances
are
areminimized
minimized are
aremaximized
maximized

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Applications
 Customer segmentation e.g. for targeted marketing
 Group/cluster existing customers based on time series of
payment history such that similar customers in same
cluster.
 Identify micro-markets and develop policies for each
 Collaborative filtering:
 group based on common items purchased
 Text clustering
 Compression

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Association Rule Discovery: Definition

 Given a set of records each of which contain some number of

items from a given collection;
 Produce dependency rules which will predict occurrence of an item
based on occurrences of other items.

TID Items
1 Bread, Coke, Milk
Rules
RulesDiscovered:
Discovered:
2 Beer, Bread
{Milk}
{Milk}-->
-->{Coke}
{Coke}
3 Beer, Coke, Diaper, Milk {Diaper,
{Diaper,Milk}
Milk}-->
-->{Beer}
{Beer}
4 Beer, Bread, Diaper, Milk
5 Coke, Diaper, Milk

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Association Rule Discovery: Application

 Supermarket shelf management.

 Goal: To identify items that are bought together by
sufficiently many customers.
 Approach: Process the point-of-sale data collected with
barcode scanners to find dependencies among items.
 A classic rule --
▪ If a customer buys diaper and milk, then he is very likely to buy
beer:

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The Sad Truth About Diapers and Beer

▪ So, don’t be surprised if you find six-packs stacked next to diapers!

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Sequential Pattern Discovery: Definition

Given is a set of objects, with each object associated with its

own timeline of events, find rules that predict strong
sequential dependencies among different events:

 In telecommunications alarm logs,

▪ (Inverter_Problem Excessive_Line_Current)
(Rectifier_Alarm) --> (Fire_Alarm)
 In point-of-sale transaction sequences,
▪ Computer Bookstore:
(Intro_To_Visual_C) (C++_Primer) -->
(Perl_for_dummies,Tcl_Tk)
▪ Athletic Apparel Store:
(Shoes) (Racket, Racketball) --> (Sports_Jacket)

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Data Mining in practice

Industry Application
Finance Credit Card Analysis
Insurance Claims, Fraud Analysis
Telecommunication Call record analysis
Transport Logistics management
Consumer goods promotion analysis
Data Service providers Value added data
Utilities Power usage analysis

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2021
Facebook Example

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2021
 Thank You

Thank You
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