There are several definitions for data mining. The simplest is; it is a tool which can be used for knowledge discovery from a large data set. An even simpler explanation is that it is a tool to find hidden information in a large amount of data. The key word here is hidden. Data mining techniques allow managers and researchers to find information that they otherwise would not have found.
It usually requires a data warehouse and there are two basic methodologies for analyzing the data. The first is the "classical approach" which includes statistical techniques, neighborhoods and clustering. The second approach involves the use of decision trees, neural networks and decision rules.