What Is Data Mining and How Does It Work?

What Is Data Mining and How Does It Work?

As technology evolves, people become familiar with many technological terms. Although you may have heard of data mining, data analytics, data scientists, big data, predictive analytics, and data analysts, you may not fully understand them. For example, business owners may hear that data is currency, and they should invest in data mining, but they may not fully grasp what data mining is, how it works, or how their business will benefit.

Breaking technical terms down into layman’s terms and identifying the benefits of various technological processes enables business owners to understand the value of investing in data, data mining, and data analytics. Let’s look at what data mining is, how data mining works, and its benefits.

Data Mining

Data science involves using scientific methods to convert various types of data into meaningful information. Data mining is one of the methods data scientists use to process data. Data mining involves scouring data sets and finding rules, anomalies, or patterns. Data mining’s also referred to as knowledge discovery in data (KDD). Data scientists clarify the question they wish to answer. They gather and process the data using parameters intended to answer their research question. Applied modeling techniques generate insights businesses use to make informed decisions.

Data scientists start the data mining process by collecting large data sets. These data sets can include structured, historical, and unstructured data. Data mining techniques applied to the data identify useful information. For example, the data might reveal a cause and effect relationship between events, such as verifying that a business sees a specific result when applying a particular strategy. Data mining could illustrate that every time a business increases wages and benefits, they retain more employees and enjoy higher customer satisfaction levels.

Data mining integrates predictive analytics, which involves making projections based on identified patterns. Suppose a company that produces medical equipment has data scientists process raw data to identify health care trends. The analysis indicates a five percent increase in the number of patients diagnosed with intrahepatic bile duct cancer every year over a decade. This trend justified a prediction that there will be a five percent increase in verified cases next year. Health insurance companies can anticipate the number of claims they’ll process. In contrast, medical equipment manufacturers can use this information to project demand for diagnostic equipment.

Ultimately, data mining converts data into meaningful information and uses data visualization software to produce reports. Suppose data mining identifies an increase in the number of diagnosed cases of bladder cancer each year over five years. A graph may illustrate this information. Data visualization software also uses charts and maps to convey information. A map can identify regions with higher concentrations of specific illnesses, enabling medical researchers to consider environmental factors contributing to health issues.

What Is Data Mining and How Does It Work?


One primary benefit of data mining involves saving time and money. It’s more efficient to use data mining to process large data sets instead of relying on people to analyze large amounts of data. Technology makes it possible to develop real-time information incorporating the latest data, ensuring businesses consider current variables when making business decisions.

For example, there’s been a computer chip shortage during the COVID-19 pandemic. Computer manufacturers had to adjust production levels and establish priorities when the shortage was detected. Some may have turned to other supply channels to acquire stock. In contrast, others may have scaled back production quotas of less popular laptops and tablets, enabling them to produce in-demand products and maximize profits despite production decreases.

All industries can use data mining to acquire helpful information. The insights generated from data mining help companies avoid unnecessary or unprofitable expenditures. Companies can also anticipate future demand levels, enabling them to prioritize in-demand products.

Data mining involves processing large data sets, identifying trends or rules, and developing valuable insights from the data. Businesses use data mining to make informed business decisions, such as allocating research and development funds.