Prediction as Data Mining Task

Definition and business-related examples

Prepared by Huan TruongOmer Demir

Outline

What is Data Mining? Data Mining – Predict the future Specific uses of Data Mining Predictive Data Mining

What is Data Mining

Knowledge discovery Computer-assisted process of

digging through and analyzing enormous sets of data

Extracting the meaning of the data

Data mining – Predict the Future

Predict behaviors and future trends Allowing businesses to make

proactive, knowledge-driven decisions

Data mining – Predict the Future

What are the anticipated sales by territory and region for next year?

Which salespersons are expected to exceed their quotas next year?

For the next two years, which stores are likely to have best performance?

What is the expected returns for next year’s promotions?

Which customers are likely to switch to the competition next year?

Specific uses of data mining

Market segmentation Customer churn Fraud detection Direct marketing Interactive marketing Trend analysis …

Predictive Data Mining

The most common type of data mining

The most direct business applications Data mining projects with the goal to

identify a statistical or neural network model or set of models that can be used to predict some response of interest.

Predictive Data Mining Techniques

Neural Network - Analytic techniques modeled after the (hypothesized) processes of learning in the cognitive system and the neurological functions of the brain and capable of predicting new observations (on specific variables) from other observations (on the same or other variables) after executing a process of so-called learning from existing data

Predictive Data Mining Techniques

Meta-Learner – Combination of the predictions from multiple models, useful when the types of models included in the project are very different