Data analysis is defined as a process of cleaning,transforming, and modeling data to discoveruseful information for business decision-making.
The purpose of Data Analysis is to extract usefulinformation from data and taking the decisionbased upon the data analysis.
Types
Descriptive Analytics:
Objective: Describes what has happened in the past.
Focus: Summarizes and provides an overview of historical data.
Methods: Aggregation, summarization, and data visualization.
Example: Generating reports on monthly sales, summarizing website traffic, or creating dashboards displaying key performance indicators (KPIs).
Diagnostic Analytics:
Objective: Examines past data to understand why a certain event happened.
Focus: Identifying patterns, correlations, and relationships.
Methods: Drill-down, data mining, and correlation analysis.
Example: Investigating the reasons behind a sudden spike or drop in sales, analyzing the factors contributing to customer churn, or identifying the root causes of production issues.
Predictive Analytics:
Objective: Predicts future outcomes or trends based on historical data.
Focus: Forecasting and making predictions.
Methods: Statistical models, machine learning algorithms, and time-series analysis.
Example: Forecasting future sales based on historical data, predicting equipment failures in a manufacturing plant, or estimating the likelihood of a customer making a purchase.
Prescriptive Analytics:
Objective: Recommends actions to optimize a particular outcome.
Focus: Providing advice on what actions to take to achieve desired results.
Methods: Optimization algorithms, simulation, and decision analysis.
Example: Recommending optimal pricing strategies for products, suggesting personalized marketing approaches for different customer segments, or advising on inventory levels to minimize stockouts.