Statistical Learning
Introduction to Statistics
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Outline
1. Why Statistics
2. Statistical Methods
3. Types of Statistics - Descriptive and Inferential
Statistics
4. Data Sources and Types of Datasets
5. Attributes of Datasets
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Statistics - Methods
Classification
• Classification techniques helps in segmenting the customers into
appropriate groups based on key characteristics.
• For example, using appropriate statistical model, an organization
could easily segment the customers into Long Term Customers,
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Medium Term Customers, and Brand Switchers.
• Another application in this context is classifying customers into
“Buyers and Non-Buyers.”
• Classification helps professionals understand the customer
behavior and position their products and brands using
appropriate strategies.
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Statistics - Methods
Pattern Recognition
• “A picture is worth thousand words” and it reveals hidden pattern in
the data that could be leveraged by retail professionals. Pattern
recognition techniques include Histogram, Box Plot, Scatter Plot and
other Visual Analytics.
• For example, histogram drawn for income of a particular class of
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customers may reveal a symmetrical bell curve pattern or may be left
or right skewed.
• Relationship between age and expenditure could be captured
using a scatter plot.
• Box Plot enables identification of outliers (extreme
points) apart from providing the distribution pattern.
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Statistics - Methods
Association
• Association Analysis helps in determining which of the items go
together. Association rules include a set of analytics that focuses on
discovering relationships that exist among specific objects.
• In this context, market basket analysis refers to an association rule that
generates the probability for an outcome.
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• For example, market basket analysis may lead to a finding that if
customers buy coffee, there is a 40% probability that they also buy
bread.
• Association rules can be adapted by organizations to store lay cross
selling among other items, discount and sales promotion decisions.
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Statistics - Methods
Predictive Modeling
• Both customer segmentation as well as identifying and targeting most
profitable customers can be facilitated by predictive models.
• Regression can be used for predicting the amount of expenditure on a
particular product based on input variables income, age, and gender.
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• Organizations can leverage on other advanced models that comprise
Logistic Regression, and Neural Networks for predicting a target
variable as well as classifying and predicting into which group the
consumer belongs to.
• For example, these models can classify and predict buyers and non-
buyers, and defaulters and non-defaulters on credit card loan.
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Classical Definition of Statistics
“ By Statistics, we mean methods specially adopted to the
elucidation of quantitative data affected to a marked extent by
multiplicity of causes”.
Yule and Kendal
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It is interesting to see what Thomas Davenport means by Business
Analytics and note the similarities and dissimilarities between the
two.
“Business Analytics (BA) can be defined as the broad use of
data and quantitative analysis for decision making within
organizations”.
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Types of Statistics
Descriptive Statistics Inferential Statistics is a
is concerned with Data method used to talk
Summarization, about a Population
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Graphs/Charts, and
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Tables
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Population, Parameter, Sample, Statistic
A Population is the universe of possible data for a specified object.Example:
People who have visited or will visit awebsite.
A Parameter is a numerical value associated with a population. Example: The
average amount of time people spend on awebsite.
A Sample is a selection of observations from a population. Example: People (or IP
addresses) who visited a website on a specific day.
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A Statistic is a numerical value associated with an observed sample. Example: The
average amount of time people spent on a website on a specificday.
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Data Sources
Primary Data are collected by the organization itself for a particular
purpose. The benefits of primary data are that they fit the needs
exactly, are up to date, and reliable.
Secondary Data are collected by other organizations or for other
purposes. Any data, which are not collected by the organization for the
specified purpose, are secondary data. These may be published by
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other organizations, available from research studies, published by the
government, web, social media and so on.
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Types of Data
Qualitative Data are nonnumeric Quantitative data can be classified
in nature and can't be into discrete type or continuous
measured. Examples are gender, type. Discrete type can take only
religion, and place of birth. certain values, and there are
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as the number of rooms in a hotel,
Quantitative Data are numerical
which cannot be in fraction.
in nature and can be Continuous type can take any value
measured. Examples are balance in
within a specific interval, such as the
your savings bank account, and
production quantity of a particular
number of members in your family.
type of paper (measured in
kilograms).
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Types of Data Sets
• Record
• Relational records
• Data matrix, e.g., numericalmatrix,
crosstabs
• Document data: text documents:term-
frequency vector
• Transaction data
• Graph and network
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• World Wide Web
• Social or information networks
• Molecular Structures
• Ordered
• Video data: sequence of images
• Temporal data: time-series
• Sequential Data: transaction sequences
• Genetic sequence data
• Spatial, image and multimedia:
• Spatial data: maps
• Image data
• Video data
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