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Data Warehousing and Data Mining

notes 2.9 advantages of Data Mining

Advantages of data mining from different point of view are:

Marketing/retailing

Data mining can aid direct marketers by providing them with useful and accurate trends about
their customers’ purchasing behavior. Based on these trends, marketers can direct their marketing
attentions to their customers with more precision. For example, marketers of a software company
may advertise about their new software to consumers who have a lot of software purchasing
history. In addition, data mining may also help marketers in predicting which products their
customers may be interested in buying. Through this prediction, marketers can surprise their
customers and make the customer’s shopping experience becomes a pleasant one.
Retail stores can also benefit from data mining in similar ways. For example, through the trends
provide by data mining, the store managers can arrange shelves, stock certain items, or provide
a certain discount that will attract their customers.

Banking/crediting

Data mining can assist financial institutions in areas such as credit reporting and loan information.
For example, by examining previous customers with similar attributes, a bank can estimated
the level of risk associated with each given loan. In addition, data mining can also assist credit
card issuers in detecting potentially fraudulent credit card transaction. Although the data mining
technique is not a 100% accurate in its prediction about fraudulent charges, it does help the credit
card issuers reduce their losses.
Law enforcement

Data mining can aid law enforcers in identifying criminal suspects as well as apprehending these
criminals by examining trends in location, crime type, habit, and other patterns of behaviors.

researchers

Data mining can assist researchers by speeding up their data analyzing process; thus, allowing
them more time to work on other projects.

2.10 Disadvantages of Data Mining

Disadvantages of data mining are:

privacy issues

Personal privacy has always been a major concern in this country. In recent years, with the
widespread use of Internet, the concerns about privacy have increase tremendously. Because
of the privacy issues, some people do not shop on Internet. They are afraid that somebody may
have access to their personal information and then use that information in an unethical way; thus
causing them harm.

Although it is against the law to sell or trade personal information between different organizations,
selling personal information have occurred. For example, according to Washing Post, in 1998,
CVS had sold their patient’s prescription purchases to a different company. In addition, American
Express also sold their customers’ credit care purchases to another company. What CVS and
American Express did clearly violate privacy law because they were selling personal information

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