Data Mining: Advantages & Disadvantages

Instructor: Kaitlin Oglesby
While many people may be excited about the opportunities that data mining can provide companies, there must still be attention paid to some of the disadvantages of this technique.

Performing Data Mining

As companies continue to gather more and more data on their operations and computer processing speed allows for incredible amounts of detail to be gleaned from that data, data mining has become a truly crucial part of many company's strategies. After all, it takes use of information that a company already has about its operations and is manipulated in such a way that creates actionable knowledge. As you can imagine, there are a number of advantages to being able to perform data mining on a body of information. However, just as importantly, companies that do a poor job of data mining stand ready to lose more than they bargained for.

Advantages of Data Mining

There are a number of advantages to data mining. Most obviously, data mining can be used to help identify predictable behavior about the future. If you're a small business owner and you notice the same customer come in every Tuesday afternoon, you'll be sure to have whatever it is that he is buying on Tuesday afternoon in stock. Data mining takes that sort of thinking to a whole new level that a small shop may not have to contend with. For example, data mining may figure out that customers are much more likely to order pizza on a Tuesday than a Friday. As such, companies can prepare to be very competitive on their pizza specials on a Tuesday.

Data mining can also be used for non-marketing purposes. With new ways of looking at information, new inferences about data can be made. This can translate into new options when it comes time to make important decisions about the future of the company. Data mining can indicate where to put a new distribution center, as well as even which employees to consider promoting. In fact, data mining old sales records of consumers can even help point to fraud by highlighting atypical actions.

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