1. Data Mining
An Introduction

2. Definitions Data Mining is …
knowledge discovery using sophisticated blend of techniques from traditional statistics, artificial intelligence and computer graphics.
Data mining is …
discovery of useful, possibly unexpected, patterns in data.

3. Definitions
Data mining is the analysis of (often large) observational data sets to find unsuspected relationships and to summarize the data in novel ways that are both understandable and useful to the data owner
Data mining is the extraction of interesting (non-trivial, implicit, previously unknown and potentially useful) information or patterns from data in large databases.

4. Goals of Data Mining Explanatory Confirmatory Exploratory
To explain some observed event or condition, e.g., why sales of trucks has increased in region A?
Confirmatory
To confirm a hypothesis, e.g., whether two-income families are more likely to buy family medical coverage as compared to single-income families
Exploratory
To analyze data for new or unexpected relationships, e.g., what spending patterns are likely to accompany credit card fraud?

5. Data Mining Techniques
Data mining can be performed on a data mart or EDW.
Depending on the nature of the data to be analyzed and size of data set, any of the following techniques can be used:
Regression
Test or discover relationships from historical data
Decision tree induction
Test or discover ‘if…Then’ rules for decision tendency
Clustering and Signal Processing
Discover subgroups or segments

6. Data Mining Techniques(Contd.)
Affinity
Discover things with strong mutual relationships
Sequence Association
Discover cycles of events & behaviours
Case-based reasoning
Derives rules from real-world case examples
Rule discover
Searches for patterns & correlations in large datasets
Fractals
Compresses large databases without losing information
Neural nets
Develops predictive models based on principles modeled after human brain

7. Analytical Processing vs. Models
To a database person, data-mining is a powerful form of analytic processing --- queries that examine large amounts of data.
Result is the data that answers the query.
To a statistician, data-mining is the inference of models.
Result is the parameters of the model

8. Data Mining & Knowledge Discovery in Databases

9. CRISP-DM methodology Cross Industry Standard Process for Data Mining
Six phases
Business Understanding
Data Understanding
Data Preparation
Modeling
Evaluation
Deployment

10. Data Mining Applications
Profiling Populations
Developing profiles of a high-value customers, credit risks, and credit-card frauds
Analysis of business trends
Identifying markets with above/below average growth
Target marketing
Identifying customers for promotional activity
Usage analysis
Identifying usage patterns for products and services
Campaign effectiveness
Comparing campaign strategies for effectivesness

11. Data Mining Applications
Product Affinity
Identifying products that are purchased concurrently, or the shoppers characteristics for certain product groups
Customer retention and churn
Examining the behaviour of customers who left for competitors to prevent remaining customers from leaving
Profitability analysis
Determining which customers are profitable
Customer Value Analysis
Determining where valuable customers are at different stages in their life

12. Data Mining Applications
Up-selling
Identifying new products and services to sell to a customer based upon critical events and life-style changes
Intelligence gathering
total information awareness
Web analysis
Ranking web pages
Financial
predict price movements to make better investments

13. Frequent ItemSets and “Association Rules”
Some related concepts to
Data Mining
Slides by Jeffrey Ullman, Stanford

14. The Market-Basket Model
A large set of items, e.g., things sold in a supermarket.
A large set of baskets, each of which is a small set of the items, e.g., the things one customer buys on one day.

15. Association Rule Mining
transaction id
customer id
products
bought
sales
records:
market-basket
data
Trend: Products p5, p8 often bought together

16. Support
Simplest question: find sets of items that appear “frequently” in the baskets.
Support for itemset I = the number of baskets containing all items in I.
Given a support threshold s, sets of items that appear in > s baskets are called frequent itemsets.

17. Applications --- (1)
Real market baskets: chain stores keep terabytes of information about what customers buy together.
Tells how typical customers navigate stores, lets them position tempting items.
Suggests tie-in “tricks,” e.g., run sale on diapers and raise the price of beer.
High support needed, or no $$’s .

18. Applications --- (2)
“Baskets” = documents; “items” = words in those documents.
Lets us find words that appear together unusually frequently, i.e., linked concepts.
“Baskets” = sentences, “items” = documents containing those sentences.
Items that appear together too often could represent plagiarism.

19. Applications --- (3) “Baskets” = Web pages; “items” = linked pages.
Pairs of pages with many common references may be about the same topic.
“Baskets” = Web pages p ; “items” = pages that link to p .
Pages with many of the same links may be mirrors or about the same topic.

20. Important Point
“Market Baskets” is an abstraction that models any many-many relationship between two concepts: “items” and “baskets.”
Items need not be “contained” in baskets.
The only difference is that we count co-occurrences of items related to a basket, not vice-versa.

21. Scale of Problem
WalMart sells 100,000 items and can store billions of baskets.
The Web has over 100,000,000 words and billions of pages.

22. Association Rules If-then rules about the contents of baskets.
{i1, i2,…,ik} → j means: “if a basket contains all of i1,…,ik then it is likely to contain j.
Confidence of this association rule is the probability of j given i1,…,ik.

23. Example An association rule: {m, b} → c. B1 = {m, c, b} B2 = {m, p, j}
B3 = {m, b} B4 = {c, j}
B5 = {m, p, b} B6 = {m, c, b, j}
B7 = {c, b, j} B8 = {b, c}
An association rule: {m, b} → c.
Confidence = 2/4 = 50%. + _ _

24. Interest
The interest of an association rule is the absolute value of the amount by which the confidence differs from what you would expect, where items are selected independently of one another.

25. Example
B1 = {m, c, b} B2 = {m, p, j}
B3 = {m, b} B4 = {c, j}
B5 = {m, p, b} B6 = {m, c, b, j}
B7 = {c, b, j} B8 = {b, c}
For association rule {m, b} → c, item c appears in 5/8 of the baskets.
Interest = | 2/4 - 5/8 | = 1/8 --- not very interesting.

26. Relationships Among Measures
Rules with high support and confidence may be useful even if they are not “interesting.”
We don’t care if buying bread causes people to buy milk, or whether simply a lot of people buy both bread and milk.
But high interest suggests a cause that might be worth investigating.

27. Finding Association Rules
A typical question: “find all association rules with support ≥ s and confidence ≥ c.”
Note: “support” of an association rule is the support of the set of items it mentions.
Hard part: finding the high-support (frequent ) itemsets.
Checking the confidence of association rules involving those sets is relatively easy.

28. Computation Model
Typically, data is kept in a “flat file” rather than a database system.
Stored on disk.
Stored basket-by-basket.
Expand baskets into pairs, triples, etc. as you read baskets.

29. Computation Model --- (2)
The true cost of mining disk-resident data is usually the number of disk I/O’s.
In practice, association-rule algorithms read the data in passes --- all baskets read in turn.
Thus, we measure the cost by the number of passes an algorithm takes.

30. Main-Memory Bottleneck
In many algorithms to find frequent itemsets we need to worry about how main memory is used.
As we read baskets, we need to count something, e.g., occurrences of pairs.
The number of different things we can count is limited by main memory.
Swapping counts in/out is a disaster.

31. Finding Frequent Pairs
The hardest problem often turns out to be finding the frequent pairs.

32. Other Effective Approaches
Naïve Algorithm
A-Priori Algorithm