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Data mining: a tool for marketers.

Clickstream analysis and data mining are marketing processes that use analytical patterns to predict customer behavior based on the customer's previous interaction or activity with the system. Clickstream analysis deals with capturing customers' shopping habits and using that information for target marketing, while data mining automates the detection of relevant patterns in a database by extracting information from large volumes of data.

Data mining is not a new concept. It's been in use for many years, but it was done through 3-by-5 cards until the introduction of computers. Catalogue companies pioneered the process by manually capturing customer activity on the card and then, after some time, beginning to detect some commonalities and patterns that ultimately helped them predict customer behavior.

Using established statistical and machine-learning techniques to build models that predict future customer behavior, data mining is big business these days. It extracts hidden patterns of customer behavior and discovers relationships that connect variables in a database. Armed with this information, marketers can make an informed decision on whether to spend their money on retaining their loyal customers or on non-loyal customers who are on the verge of defecting to the competition.

Data mining also provides valuable information that can help marketers answer some critical questions about their customers, such as which are most likely to respond favorably to their marketing campaign or which might be inclined to spend a specific amount of money.

As a marketing tool, data mining not only helps in prospecting customers, but also enhances customer retention, detects relations and identifies common groups of products. Although data mining is not specific to any industry, it does take effort to explore the hidden knowledge the data reveals.

Bottom line: The goal of data mining is to create models for decision-making that predict future behavior based on analysis of past activity. If you're shopping for a data-mining tool, check out PolyAnalyst data mining suite from Megaputer at www.megaputer.com/products/pa/index.php3.

Pius Oleh is an independent technology consultant.

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Title Annotation:Marketing
Author:Oleh, Pius
Publication:Detroiter
Geographic Code:1USA
Date:May 1, 2004
Words:335
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