Data mining refers to the automated analysis of large data sets stored in a data warehouse with a view to finding patterns that might otherwise go undiscovered. It will be apt to understand data mining as technology/software that helps unearthing and utilization of information. With information power, it helps solve critical business/marketing problems. It also helps tap opportunities and secure new revenues.
The process involved is similar to the extraction of metal out of ore, and hence the use of the term mining. As with extraction of metal from ore, data mining too is based on the filtration process. It involves the assaying of a mountain of data ore in order to get at some data nuggets
Today, with the decline in the cost of computing power, most organizations are anyway generating mountains of data. The question is one of intelligent extraction of meaningful information. Data mining technique comes handy in this context.
Data mining can be of use in such tight targeting. For example, assuming that direct mail is the tool used for direct marketing the marketer will naturally like to fine-tune his list of target prospects for direct mail. With data mining softwareâ€™s, he will be able to achieve the purpose. He can sweep through mountains of databases, identify previously hidden patterns and develop an ideal list of target prospects. The software can analyze massive databases in minutes reckon all the data generated by previous direct mailings and zero in on a list of target prospects that will not only definitely result in sales, but will also lead to most profitable kind of sales.
Data mining leads to customer database, which, in turn forms the foundation of all tightly targeted marketing. Data mining leads to other kinds of database as well besides customer database. For example, it can generate useful database on dealers / franchisees / other types of marketing channels. It can also provide a database on media. Practically in all aspects of marketing, where data is involved and there is no aspect where data is not involved â€“ data mining will be of help.
While data mining can be of use in all forms of direct marketing as all of them rest on tight targeting through carefully developed customer database it can be of special use in online/Internet marketing. We have explained therein how online/Internet marketing generates and uses appropriate customer database and thereby customized offers to individual customers possible.
Data mining can also be of use to retail stores in selling more to their customers. To sell more they have to first know who requires what. Then, they can cry to sell them more through suitable special offers etc