Data Mining

AAA

DEFINITION of 'Data Mining'

A process used by companies to turn raw data into useful information. By using software to look for patterns in large batches of data, businesses can learn more about their customers and develop more effective marketing strategies as well as increase sales and decrease costs. Data mining depends on effective data collection and warehousing as well as computer processing.

INVESTOPEDIA EXPLAINS 'Data Mining'

Grocery stores are well-known users of data mining techniques. Many supermarkets offer free loyalty cards to customers that give them access to reduced prices not available to non-members. The cards make it easy for stores to track who is buying what, when they are buying it, and at what price. The stores can then use this data, after analyzing it, for multiple purposes, such as offering customers coupons that are targeted to their buying habits and deciding when to put items on sale and when to sell them at full price.


Data mining can be a cause for concern when only selected information, which is not representative of the overall sample group, is used to prove a certain hypothesis.

RELATED TERMS
  1. Barcode

    A graphical representation of a product's identifying information ...
  2. Data Warehousing

    The electronic storage of a large amount of information by a ...
  3. Data Smoothing

    The use of an algorithm to remove noise from a data set, allowing ...
  4. Certified Data Processor - CDP

    An information technology (IT) certification. The certificate ...
  5. Bias

    Biases are human tendencies that lead us to follow a particular ...
  6. Longitudinal Data

    The process of collecting sample observations from a larger population ...
RELATED FAQS
  1. How does Twitter (TWTR) make money?

    Learn how Twitter earns revenue, including the company's use of three targeted advertising streams and data farming and licensing.
Related Articles
  1. Markets

    Consumer Spending As A Market Indicator

    What people buy and where they shop can provide valuable information about the economy.
  2. Active Trading

    Data Mining For Investors

    Being an informed investor is extremely important, but where and how do you get the data for your research?
  3. Personal Finance

    How Pinterest Makes Money

    Unlike other social platforms, Pinterest actually caters to people who want more stuff.
  4. Entrepreneurship

    How Important Is Social Media For Your Company?

    Freelancers and marketing agencies are just some of the resources companies are now using to develop their social media.
  5. Fundamental Analysis

    Google Ads Vs. Facebook Ads

    Universal access to the internet through smartphones, tablets and computers has driven the success of numerous companies. Most notably, Google and Facebook have witnessed staggering growth as ...
  6. Personal Finance

    How Shazam Makes Money

    Prior to universal access to digital technology, identifying music in restaurants, bars, or stores was difficult to nearly impossible. Founded in 2000, Shazam provided a readily-available solution ...
  7. Investing

    How to Use Stratified Random Sampling

    Stratified random sampling is a technique best used with a sample population easily broken into distinct subgroups. Samples are then taken from each subgroup based on the ratio of the subgroup’s ...
  8. Personal Finance

    How The Internet Web Ad Industry Works

    Over the past 10 years, advertising strategies have evolved as a result of technological development as the internet has provided new channels for advertisers to reach a larger audience.
  9. Personal Finance

    Tinder to Start Swiping for Cash?

    For two years, Tinder has been able to stay afloat without relying on any kind of revenue stream. Now, the free match-making mobile app is exploring a new money-making model in an effort to cash ...
  10. Entrepreneurship

    Will Pandora And Spotify Disrupt Music Royalties?

    As technology has evolved, the landscape of the music industry has changed from radio broadcasts to mp3 and now streaming services.

You May Also Like

Hot Definitions
  1. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  2. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  3. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
  4. Investment Grade

    A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such ...
  5. Fringe Benefits

    A collection of various benefits provided by an employer, which are exempt from taxation as long as certain conditions are ...
  6. Irrevocable Trust

    A trust that can't be modified or terminated without the permission of the beneficiary. The grantor, having transferred assets ...
Trading Center