Advantages and Disadvantages of Data Mining

Data mining is an important part of the knowledge discovery process that we can analyze an enormous set of data and get hidden and useful knowledge.

Data mining is applied effectively not only in the business environment but also in other fields such as weather forecast, medicine, transportation, healthcare, insurance, government…etc.

Data mining has a lot of advantages when using in a specific industry.

Besides those advantages, data mining also has its own disadvantages e.g., privacy, security, and misuse of information. We will examine the advantages and disadvantages of data mining in different industries in greater detail.

Advantages of Data Mining

Marketing / Retail

Data mining helps marketing companies build models based on historical data to predict who will respond to the new marketing campaigns such as direct mail, online marketing campaign…etc. Through the results, marketers will have an appropriate approach to selling profitable products to targeted customers.

Data mining brings a lot of benefits to retail companies in the same way as marketing. Through market basket analysis, a store can have an appropriate production arrangement in a way that customers can buy frequent buying products together with pleasant. In addition, it also helps the retail companies offer certain discounts for particular products that will attract more customers.

Finance / Banking

Data mining gives financial institutions information about loan information and credit reporting. By building a model from historical customer data, the bank, and financial institution can determine good and bad loans. In addition, data mining helps banks detect fraudulent credit card transactions to protect the credit card’s owner.


By applying data mining in operational engineering data, manufacturers can detect faulty equipment and determine optimal control parameters. For example, semiconductor manufacturers have a challenge that even the conditions of manufacturing environments at different wafer production plants are similar, the quality of wafer are a lot the same and some for unknown reasons even has defects. Data mining has been applying to determine the ranges of control parameters that lead to the production of the golden wafer. Then those optimal control parameters are used to manufacture wafers with desired quality.


Data mining helps government agencies by digging and analyzing records of financial transaction to build patterns that can detect money laundering or criminal activities.

Disadvantages of data mining

Privacy Issues

The concerns about personal privacy have been increasing enormously recently especially when the 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 an unethical way that potentially causing them a lot of trouble. Businesses collect information about their customers in many ways for understanding their purchasing behavior trends. However businesses don’t last forever, some days they may be acquired by others or gone. At this time, the personal information they own probably is sold to others or leak.

Security issues

Security is a big issue. Businesses own information about their employees and customers including social security numbers, birthdays, payroll and etc. However, how properly this information is taken care of is still in question. There have been a lot of cases that hackers accessed and stole big data of customers from a big corporation such as Ford Motor Credit Company, Sony… with so much personal and financial information available, the credit card was stolen and identity theft becomes a big problem.

Misuse of information/inaccurate information

Information is collected through data mining intended for ethical purposes can be misused. This information may be exploited by unethical people or businesses to take the benefits of vulnerable people or discriminate against a group of people.

In addition, the data mining technique is not perfectly accurate. Therefore, if inaccurate information is used for decision-making, it will cause serious consequences.


Advantages and Disadvantages of Data Mining

Data mining brings a lot of benefits to businesses, society, governments as well as the individual. However, privacy, security, and misuse of information are the big problems if they are not addressed and resolved properly.