Proceedings of the 8th

World Congress on Intelligent Control and Automation

July 6-9 2010, Jinan, China

A Knowledge Discovery and Data Mining

Process Model in E-Marketing∗
Huifang Zeng, Ding Pan+
Center for Business Intelligence Research, Management School, Jinan University
Guangzhou 510632
E-mail: zenghuif@gmail.com; +pandingcn@gmail.com

Abstract- Based on the process model CRISP-DM, this
paper has solved E-marketing problems like network customer
prediction and market segmentation. Each phase of this model
was described firstly, and then its application in E-marketing
was presented, which provides a complete description of all the
steps, from understanding the problem domain to using the
discovered knowledge. Finally a KDDM procedure of network
marketing is discussed thoroughly, and a simple operating and
easy understanding process model is provided to marketing
people who have difficulties to make marketing decisions.
Key words - E-marketing/network marketing, e-customer,
data mining process, CRISP-DM
The objective of this paper is to remedy the dilemma
discussed above and to propose the usage of a six- phase
knowledge discovery and data mining process
model-CRISP-DM in previously unexplored area of
E-marketing. We present the framework of the process
model firstly, and then describe each step in detail. After all,
we aim for proposing a simple operating and easy
understanding process model which should be reliable and
repeatable by E-marketing people with little data mining
background.
II. THE CRISP-DM MODEL AND E-MARKETING

I. INTRODUCTION A. The CRISP-DM Process Model

The cross-industry standard process for data mining
Using the internet and web based information (CRISP-DM) is an nonlinear and iterative process model,
technology to carry out the marketing activities is called developed in 1996, and became the most favored
E-marketing [1]. Due to the development of network methodology ever since [7]. The research described in this
technology, it is convenient and inexpensive to obtain large article is conducted by this methodology. Figure 1 shows
amounts of data. The fact is that the original data cannot be that CRISP-DM comprising of six phases:
directly used to guide E-marketing decision-making, so a
crucial problem is how to extract useful knowledge and
patterns to support decisions which will be made by
business persons.
The traditional market research methods are highly Business Data
Understanding Understanding
subjective and static; it is difficult to support the objective
marketing decisions. In addition, the previous data mining
in E-marketing, emphasizing too much on model selection Data
and algorithms, while ignoring some important steps, such Deployment
preparation

as: business understanding and data preparation. Although Data

an e-customer behavior (eCB) model that uses an online Modeling

analytical mining (OLAM) methodology has been proposed
by Kwan et al. to foster the development of a marketing
plan for B2C Web sites [2], knowledge discovery in Evaluation

E-marketing is challenging.
CRISP-DM is currently the most popular and broadly
adopted model which has been already acknowledged and
relatively widely used in both research and industrial Fig. 1 The CRISP-DM process model
communities [3]. For instance, CRISP-DM model is used in 1) Business Understanding: involve the project
automotive direct marketing by Gersten et al.[4], processing objectives and requirements, define data mining problems,
small and medium sized enterprises' data [5], for customer and design a preliminary plan to achieve the objectives.
churn prediction[6], and so on.. Nevertheless, little research 2) Data Understanding: start with the initial data
has used it to develop E-marketing problems. In fact, it collection and further gather the description of data, the
almost has become a prescribed standard, thus this paper exploration of data, and the verification of data quality.
argues that specializing CRISP-DM for discovering
knowledge in website is significant.

∗
This work is partially supported by National Natural Science Foundation of China grant #70771044 and #70872020, and Jinan University Fund for
Humanities and Social Science grant #006JSYJ013.

978-1-4244-6712-9/10/$26.00 ©2010 IEEE 3960

 3) Data Preparation: cover analyzing of the initial raw
data, and constructing the final data set to mine.
4) Modeling: aim at selecting the actual modeling
techniques and calibrating their parameters to optimal
values.
5) Evaluation: evaluate the model and review the steps
executed to construct the model, make sure it properly
achieves the business objectives.
6) Deployment: generate a report or a data mining
process across the enterprise depending on the
requirements.
B. E-marketing
E-marketing is built on an advanced e-commerce
information platform, using Internet to carry out marketing
activities. In the information business model, consumer
behavior has the following characteristics:
1) Personalized consumption has become increasingly
prominent
On some of the latest emerging personalized merchandise,
consumers can via the network facilities, to determine their
consumption behavior, and find decision-making for their
own personal consumption.
2) Buying behavior inclined to emotion
When consumers face with too much information on the
Internet, they have no time and effort to choose, resulting in
consumer behavior is somewhat sentimental.
3) Customer demand for services becomes the
mainstream
Network Marketing is not only selling products to
customers, but also a concept. Marketers should dilute the
promotion strategies, communicate and exchange with
consumers in order to meet their needs.
The traditional data mining in E-marketing,
emphasizing too much on model selection and algorithms,
while ignoring some important steps, such as: business
understanding and data preparation. Characteristics appear
in network marketing, making a simple data mining
analysis of customer behavior can no longer meet the
requirements, so we need to use the CRISP-DM, thoroughly
analyze and mine customer behavior in order to fully
understand customer preferences, buying patterns, and even
customers on impulse, and then work out the correct and
timely marketing strategies.
III. APPLICATIONS OF CRISP-DM IN
E-MARKETING
As we know, there is a huge amount of data
accumulating in web marketing, such as commodity
information, network customer information and transaction
records. If we make full use of these data, and find the
useful knowledge hidden in the raw data would be very
important for enterprises to make the right decisions, adjust
market strategy, and reduce risk. The CRISP-DM process
model can be systematically analyzed the data, highly
automatically excavate the potential pattern, predict
network customer's behavior, and finally help enterprise to
achieve the above objectives. The application of this model
in network marketing is described in detail below (see Fig.
2), which provides a complete description of all the steps,
from understanding the problem domain to using the
discovered knowledge. Here we do not talk about the
detailed technical problems; just offer an application
process to make marketing people better mine patterns and
knowledge in actual situation.
A. Business Understanding
The commercial understanding is to understand the goal
and the request of DM, then transforms again as the data
mining question from the service angle. The business
understanding phase involves several key steps, including
determining business objectives, assessing the situation,
determining the data mining goals, and producing the
project plan. In the KDDM process described in this article,
CRISP-DM was conducted in order to reveal hidden,
potentially useful knowledge among the data of network
customers. Specific target can be refined as follows:

Business Data Data

Modeling Evaluation Deployment
Understanding Understanding Preparation

Determine the Collect Select

Select Attributes Evaluate Plan
E-marketing Initial Modeling
and Datasets Results Deployment
objectives Data Technique
Import Plan Monitering
Assess Clean Generate Quanlity
Data into &
Situation Data Test Design Assurance
Clementine Maintenance
Determine Set up
Explore Derive New Determine Run
Data Mining Modeling
Data Attributes Next Steps Campaign
Goals Streams
Verify Produce
Produce Integrate Assess
Data Final
Project Plan Data Model
Quality Report

Select Format Review Process Review

Working Data Plan Project
Data

Fig. 2 Tasks and Outputs of the CRISP-DM in E-marketing

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 1) Determine the E-marketing objectives: Using data females males
mining techniques to analyze network customer data we can 100%
segment the market at all levels, thus provide reliable basis
for company to locate its target market. 80% 57.0% 56.5% 53.0%
2) E-marketing program development: Usage of data
mining technology analyzes customer consumption data; 60%
digs out the customer's consumption patterns in order to
help vendors develop effective marketing programs, so as to 40%
effectively win customers and create profits.
3) Carry out one to one marketing: Enterprises can use 20% 43.0% 43.5% 47.0%

classification and clustering technology to divide a large

0%
number of customers into different classes, each class of
customers have similar attributes, so that enterprises can Bei jing Shang hai Guang zhou
provide different service for each category of customer,
increase customer satisfaction, enhance the customer's Fig. 4: The sex structure of network customer in different cities [8]
loyalty. Based on the above analysis of data understanding,
Figure 3 shows a framework of data classification and
B. Data Understanding and Preparation collection methods. In addition, according to exploring the
1) Data Understanding primary data, some interesting things are observed, such as
This phase should determine what data is available to online shopping women users account for half the sky users,
solve our business needs. According to the commercial at present the proportion accounted for 50.8%. The higher
understanding, we select the variables of following 3 the level of urban development, such as Beijing, Shanghai,
aspects to carry on the data to understand. Guangzhou, net purchases by female users are significantly
Customer individual information data: In network higher than men, as shown in Figure 4.This information
marketing, the main marketing method is "one to one", we would has potential impact on the business goals.
can collect a large number of customers personal 2) Data Preparation
information through direct sales and distribution, or online This step is the key to the success of the project. It is
survey. These data mainly reflected individual characteristic usually assumed that data preparation takes about half of
information like age, sex, education degree and so on. the project workload [3]. Firstly, we should select the data
Customer purchase behavior data: In the direct level, that discussed in data understanding and then clean them. It
each customer's purchase process can be tracked is obviously that customer individual information data are
automatically by a computer and kept a record, which preserved in customer material database permanently, and
contains the client's net purchase behavior the customer purchase behaviour data main gain from the in
characteristics(for example purchase amount, payment the customer speech list or the web documents, other
method, frequency of purchase and etc.). And this relevant information can be attained through investigation
information about the whole marketing can be collected by and detecting.
the professional market research company. Furthermore, in order to improve mining efficiency, we
Other relevant information: This type of data has not need to eliminate useless or irrelevant information and
been contained in the customer individual information and integrate the information is necessary. For example, remove
the customer purchase behavior characteristic. Such as the redundant information like the advertisement links and
website brand awareness and the macroeconomic tags in web documents, and organize the data into neat
conditions of network market including the policy changes, logical form even relational table. We should also delete the
could be obtained through surveys and consulting firm. attributes which express the similar meaning, such as name
Dat a classi fication
and account number.
In the phase of data cleansing, missing values were
either replaced by some neutral value, or the records with
Customer Other
Customer missing data were excluded from further analysis in the
individual purchase relevant
information information KDDM process. If the sample size is large, we can choose
behaviour data
the latter approach, otherwise it should consider retaining
the items.
C. Modeling
The modeling phase of CRISP-DM methodology
online survey
direct sales,
consult ant firm includes the application of various DM technologies and
distribution KD methods, with wide scale of tunable parameters [5]. It
is well known, that no method dominates the other methods
Fig. 3 Data classification and collection methods all the time. Ref. [9] provides some answers to the question
how to decide which method to choose for a particular
application. For our applications, we can choose association

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rules, cluster analysis, classification analysis to complete
our network marketing purposes.
1) Association Rules: The purpose of association rules
is to search the relevance of different items in the same
event. Such as the relevance of different commodities in a
purchase activity, while the most typical example is the
market basket analysis. We can carry out one to one
marketing sales and develop E-marketing plans with the
help of correlation analysis.
2) Cluster Analysis: Cluster analysis is used to put
together the data items and customers that have similar
characteristics. In the network marketing, in order to carry
out targeted marketing and provide more appropriate and
satisfactory service, using clustering technology to divide
the market into a number of segments on the basis of
available customer data is necessary.
3) Classification Analysis: Classification was based on
the value of variables for calculation, and then classified
according to the results. It usually involves two kinds of
statistical methods: logistic regression and discriminated
analysis, however, neural networks and decision trees have
been adopted gradually. By analyzing the existing historical
data, classification can summarize a prediction model that
could predict which customers might react to the
advertising, product catalogs, etc. Then you can determine
the network marketing objectives and provide personalized
information services, addressing the characteristics of this
type of client.
In the research described in this paper, the modeling
was supported by the data mining tool Clementine from
SPSS, mainly because its breadth of techniques, its process
support, and its scripting facilities. Using a visual
programming interface, Clementine offers rich facilities for
exploring and manipulating data. It also contains several
modeling techniques and offers standard graphics for
visualization. The single operations are represented by
nodes which are linked on a workspace to form a data flow,
a so called stream.
For our applications, we chose the Clementine of SPSS
to build the clustering model. The process of modeling is
shown in Figure 5. We use three kinds of algorithms:
Kohonen Clustering Network, K-means Clustering, and
Two-step Clustering. Because Clementine contains many
kinds of models, it permits the users compare with the
different models and choose the most appropriate model by
evaluating.
Fig. 5 The process of modeling
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In the modeling phase, we did not use any specific data
to verify the validity of the model, which only provides a
process for reference. The results may not be as expected,
you need to establish a large number of models to compare
and analyze. If the results are still not satisfied, we must
consider looping back to the second or third step, whether
the prepared data is suitable for the tool of choice.
Generally, the cost of data collection is huge. If we can use
the KDDM techniques and mining results to improve data
collection, not only we can save the cost including savings,
preprocessing, etc, but also directly affect the ability of
knowledge discovery.
D. Evaluation and Deployment
The keys steps in the evaluation phase are the
evaluation of results, the process review, and the
determination of next steps. As shown in Figure 6, the
Evaluation Chart node offers an easy way to evaluate and
compare predictive models to choose the best model for
your application. There are five types of evaluation charts:
Gains Charts, Lift Charts, Response Charts, Profit Charts,
and ROI Charts, each of which emphasizes a different
evaluation.
Here we give an example of gains charts showing
Figure 6. Gains are defined as the proportion of total hits
that occurs in each quantile. Cumulative gains charts always
start at 0% and end at 100% as you go from left to right. For
a good model, the gains chart will rise steeply toward 100%
and then level off. A model that provides no information
will follow the diagonal from lower left to upper right.
% Gain
Fig. 6 Gains chart (cumulative)
After evaluation, it is time to do a more thorough review
of the data mining engagement to determine if there is any
important factor or task that has somehow been overlooked.
And then decide whether to finish this project and move on
to deployment or whether to initiate further iterations.
The goal of deployment is that the results or solutions
should be full understood by the marketing persons in the
certain form. Thus they can deploy the data mining result(s)
into the business and take efficiency actions.
IV. CONCLUSIONS AND FURTHER WORK
According to the standard data mining process,
CRISP-DM, one can directly collect data that are essential
and useful for the mining results. It also offers practical
help to those KD researchers both from industry and
academia. In this paper, a KD procedure and method of
E-marketing is discussed thoroughly, and a simple operating
and easy understanding process model is presented to
marketing people with little data mining background.
In addition, the traditional market research methods are
highly subjective; it is difficult to support the objective
marketing decisions. While the KDDM process model can
be effective in helping market analyst find the distribution
and propensity of customers, thus to predict customer needs,
determine the marketing strategy and ultimately to develop
effective marketing plans.
However, dynamic characteristics of the marketing
make KDDM difficult to deal with unstructured data, and a
complete dynamic model can not be established to support
marketing decisions. In addition, theoretical and applied
data mining research on network marketing still at an early
exploratory stage, the dynamic characteristics add various
difficulties to the study. We can say that KDDM process
model for the academic study of E-marketing have a long
way to go.
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