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The company avoided a serious gaffe by refining the

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The company avoided a serious gaffe by refining the criteria to create a list of truly loyal guests.
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Data-mining Applications for Harrah’s Las-Vegas Hotel & Casino The tasks performed by data mining can be grouped into the following five categories. (1) Classification :: arranges customers into pre-defined segments that allow the size and structure of market groups to be monitored. Also, predictive models can be built to classify activities. An illustration of such a model is one that predicts which segment’s usage rate will experience the largest decrease when a particular promotion expires. Classification uses the information contained in sets of predictor variables, such as demographic and lifestyle data, to assign customers to segments. _____________________________________________________________________________ _ (2) Clustering :: groups customers based on domain knowledge and the database, but does not rely on predetermined group definitions. This function is beneficial because it aids hoteliers in understanding who are their customers. For example, clustering may reveal a subgroup within a predetermined segment with homogenous purchasing behavior (e.g., a subgroup of holiday shoppers within the transient segment) that can be targeted effectively through a specific ad campaign. (The idea is that the members of the subgroup will increase their number of stays or become more loyal.) On the other hand, clustering may indicate that previously determined segments are not parsimonious and should be consolidated to increase advertising efficiency. Information such as demographic characteristics, lifestyle descriptors, and actual product purchases are typically used in clustering. ______________________________________________________________________ (3) D e v i a t i o n d e t e c t i o n u n c o v e r s d a t a :: anomalies, such as a sudden increase in purchases by a customer. Information of this type can prove useful if a hotel corporation wants to thank a guest for her or his recent increase in spending or offer a promotion in appreciation.
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Marketing managers may also attempt to draw correlations between surges in deviations with uncontrollable business-environment factors that are not represented in the database (e.g., a sharp increase in gasoline prices).
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