Question

QUESTION

a. Explain the importance of data mining tools and the types of information they produce. In what type of circumstance would you advise a company to use data mining?

b. Describe the use of personalization and customization in e-commerce. What business value do these techniques have?

Answer 1

a. Data mining in huge data sets looks for hidden, valid, and potentially useful patterns. Data Mining is about discovering between the data unsuspected / previously unknown relationships. It is a multidisciplinary skill that uses the technology of machine learning, statistics, AI and databases. The insights derived through Data Mining can be used for marketing, detection of fraud and scientific discovery, etc.

First, you have to understand the business and customer goals. You need to define what your customer wants (which they do not even know themselves many times)Take stock of the current data mining scenario. Factor in resources, assumptions, constraints and other important factors in your assessment. Defining your data mining goals using business objectives and current scenario. A good data mining plan is very detailed and should be developed to achieve both business and data mining goals.

Data mining will find information such as: • Associations, or events linked to a single event.
Sequences, or events linked in time.
Classification, or patterns describing the group to which an item belongs, found by examining existing items that have been classified and by infering a set of rules.
Clusters, or unclassified but related groups, I would advise a company to use data mining when seeking new products and services, or when looking for new marketing techniques or markets. Data mining could also be helpful in trying to analyze unforeseen sales problems whose causes are hard to identify.

b. In personalization, by adjusting the message to a person's name, interests, and past purchases, merchants can target their marketing messages to specific individuals. Amazon.com, for example, greets every user logged in with their username. With customization, merchants can change the product or service delivered based on a user's preferences or prior behavior. The Wall Street Journal Online allows you to select the type of news stories that you want to see first and allows you to be alerted when certain events occur.

Internet technology's ability to track customer behavior at websites, along with records of purchases and other behaviors, allows merchants to create a customer's detailed profile. These profiles can be used to create unique, personalized web pages that display content or advertisements for products or services of particular interest to each user, enhancing customer experience and adding value. The business value of personalization is reduced marketing costs, since you spend only the money on targeting customers who are more likely to be receptive and more profitable, and improved sales results, from increased customer response to customized sites that better serve their own purpose