Advantages and disadvantages of data mining?

Answer 1

Advantages of Data MiningMarketing / RetailData mining helps marketing companies to build models based on historical data to predict who will respond to new marketing campaign such as direct mail, online marketing campaign and etc. Through this prediction, marketers can have appropriate approach to sell profitable products to targeted customers with high satisfaction.

Data mining brings a lot of benefit s to retail company in the same way as marketing. Through market basket analysis, the store can have an appropriate production arrangement in the way that customers can buy frequent buying products together with pleasant. In addition, it also help the retail company offers a certain discount for particular products what will attract customers.

Finance / BankingData mining gives financial institutions information about loan information and credit reporting. By building a model from previous customer's data with common characteristics, the bank and financial can estimate what are the god and/or bad loans and its risk level. In addition, data mining can help banks to detect fraudulent credit card transaction to help credit card's owner prevent their losses. ManufacturingBy applying data mining in operational engineering data, manufacturers can detect faulty equipments and determine optimal control parameters. For example semi-conductor manufacturers had a challenge that even the conditions of manufacturing environments at different wafer production plants are similar, the quality of wafer are lot the same and some for unknown reasons even contain defects. Data mining has been applied to determine the ranges of control parameters that lead to the production of golden wafer. Then those optimal control parameters are used to manufacture wafers with desired quality. GovernmentsData mining helps government agency by digging and analyzing records of financial transaction to build patterns that can detect money laundering or criminal activity. Disadvantages of data miningPrivacy IssuesThe concerns about the personal privacy have been increasing enormously recently especially when internet is booming with social networks, e-commerce, forums, blogs…. Because of privacy issues, people are afraid of their personal information is collected and used in unethical way that potentially causing them a lot of trouble. Businesses collect information about their customers in many ways for understanding their purchasing behaviors trends. However businesses don't last forever, some days they may be acquired by other or gone. At this time the personal information they own probably is sold to other or leak. Security issuesSecurity is a big issue. Businesses owns information about their employee and customers including social security number, birthday, payroll and etc. However how properly this information is taken is still in questions. There have been a lot of cases that hackers were accesses and stole big data of customers from big corporation such as Ford Motor Credit Company, Sony… with so much personal and financial information available, the credit card stolen and identity theft become a big problem. Misuse of information/inaccurate informationInformation collected through data mining intended for marketing or ethical purposes can be misused. This information is exploited by unethical people or business to take benefit of vulnerable people or discriminate against a group of people.

In addition, data mining technique is not perfectly accurate therefore if inaccurate information is used for decision-making will cause serious consequence.