CLASSIFICATION - Recognizes patterns that describe the group to which an item belongs to. by examining existing items that have been
classified and by inferring a set of rules.
E.g: Businesses such as Credit Card or Telephone companies worry about the loss of steady customers. The Classification helps discover the characteristics of Customers who are likely to leave and can provide a model to help managers predict those customers so that the Managers can devise special campaigns to retain such customers.
CLUSTERING – Works in a manner similar to Classification when no groups have yet been defined. A Data Mining Tool can discover different groupings within data, such as finding affinity (similar) groups for Bank Cards or Partitioning a Database into groups of Customers based on demographics and types of personal investment.
FORECASTING – Uses prediction in a different way than the others. It uses a series of existing values to forecast what other values will be.
e.g. Forecasting might find patterns in data to help managers
estimate the future value of continuous variables, such as Sales