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Machine Learning Basics for a Newbie
6 Steps of Machine learning Lifecycle Introduction to Predictive Modeling
Introduction to Exploratory Data Analysis & Data Insights Descriptive Statistics Inferential Statistics How to Understand Population Distributions?
Reading Data Files into Python Different Variable Datatypes
Probability for Data Science Basic Concepts of Probability Axioms of Probability Conditional Probability
Central Tendencies for Continuous Variables Spread of Data KDE plots for Continuous Variable Overview of Distribution for Continuous variables Normal Distribution Skewed Distribution Skeweness and Kurtosis Distribution for Continuous Variable
Central Tendencies for Categorical Variables Understanding Discrete Distributions Performing EDA on Categorical Variables
Dealing with Missing Values Understanding Outliers Identifying Outliers in Data Outlier Detection in Python Outliers Detection Using IQR, Z-score, LOF and DBSCAN
Sample and Population Central Limit Theorem Confidence Interval and Margin of Error
Bivariate Analysis Introduction
Covariance Pearson Correlation Spearman's Correlation & Kendall's Tau Correlation versus Causation Tabular and Graphical methods for Bivariate Analysis Performing Bivariate Analysis on Continuous-Continuous Variables
Tabular and Graphical methods for Continuous-Categorical Variables Introduction to Hypothesis Testing P-value Two sample Z-test T-test T-test vs Z-test Performing Bivariate Analysis on Continuous-Catagorical variables
Chi-Squares Test Bivariate Analysis on Categorical Categorical Variables
Multivariate Analysis A Comprehensive Guide to Data Exploration The Data Science behind IPL
Supervised Learning vs Unsupervised Learning Reinforcement Learning Generative and Descriminative Models Parametric and Non Parametric model
Machine Learning Pipeline Preparing Dataset Build a Benchmark Model: Regression Build a Benchmark Model: Classification
Evaluation Metrics for Machine Learning Everyone should know Confusion Matrix Accuracy Precision and Recall AUC-ROC Log Loss R2 and Adjusted R2
Dealing with Missing Values Replacing Missing Values Imputing Missing Values in Data Working with Categorical Variables Working with Outliers Preprocessing Data for Model Building
Understanding Cost Function Understanding Gradient Descent Math Behind Gradient Descent Assumptions of Linear Regression Implement Linear Regression from Scratch Train Linear Regression in Python Implementing Linear Regression in R Diagnosing Residual Plots in Linear Regression Models Generalized Linear Models Introduction to Logistic Regression Odds Ratio Implementing Logistic Regression from Scratch Introduction to Scikit-learn in Python Train Logistic Regression in python Multiclass using Logistic Regression How to use Multinomial and Ordinal Logistic Regression in R ? Challenges with Linear Regression Introduction to Regularisation Implementing Regularisation Ridge Regression Lasso Regression
Introduction to K Nearest Neighbours Determining the Right Value of K in KNN Implement KNN from Scratch Implement KNN in Python
Bias Variance Tradeoff Introduction to Overfitting and Underfitting Visualizing Overfitting and Underfitting Selecting the Right Model What is Validation? Hold-Out Validation Understanding K Fold Cross Validation
Introduction to Feature Selection Feature Selection Algorithms Missing Value Ratio Low Variance Filter High Correlation Filter Backward Feature Elimination Forward Feature Selection Implement Feature Selection in Python Implement Feature Selection in R
Introduction to Decision Tree Purity in Decision Tree Terminologies Related to Decision Tree How to Select Best Split Point in Decision Tree? Chi-Squares Information Gain Reduction in Variance Optimizing Performance of Decision Tree Train Decision Tree using Scikit Learn Pruning of Decision Trees
Introduction to Feature Engineering Feature Transformation Feature Scaling Feature Engineering Frequency Encoding Automated Feature Engineering: Feature Tools
Introduction to Naive Bayes Conditional Probability and Bayes Theorem Introduction to Bayesian Adjustment Rating: The Incredible Concept Behind Online Ratings! Working of Naive Bayes Math behind Naive Bayes Types of Naive Bayes Implementation of Naive Bayes
Understanding how to solve Multiclass and Multilabled Classification Problem Evaluation Metrics: Multi Class Classification
Introduction to Ensemble Techniques Basic Ensemble Techniques Implementing Basic Ensemble Techniques Finding Optimal Weights of Ensemble Learner using Neural Network Why Ensemble Models Work well?
Introduction to Stacking Implementing Stacking Variants of Stacking Implementing Variants of Stacking Introduction to Blending Bootstrap Sampling Introduction to Random Sampling Hyper-parameters of Random Forest Implementing Random Forest Out-of-Bag (OOB) Score in the Random Forest IPL Team Win Prediction Project Using Machine Learning Introduction to Boosting Gradient Boosting Algorithm Math behind GBM Implementing GBM in python Regularized Greedy Forests Extreme Gradient Boosting Implementing XGBM in python Tuning Hyperparameters of XGBoost in Python Implement XGBM in R/H2O Adaptive Boosting Implementing Adaptive Boosing LightGBM Implementing LightGBM in Python Catboost Implementing Catboost in Python
Different Hyperparameter Tuning methods Implementing Different Hyperparameter Tuning methods GridsearchCV RandomizedsearchCV Bayesian Optimization for Hyperparameter Tuning Hyperopt
Understanding SVM Algorithm SVM Kernels In-depth Intuition and Practical Implementation SVM Kernel Tricks Kernels and Hyperparameters in SVM Implementing SVM from Scratch in Python and R
Introduction to Principal Component Analysis Steps to Perform Principal Compound Analysis Computation of Covariance Matrix Finding Eigenvectors and Eigenvalues Implementing PCA in python Visualizing PCA A Brief Introduction to Linear Discriminant Analysis Introduction to Factor Analysis
Introduction to Clustering Applications of Clustering Evaluation Metrics for Clustering Understanding K-Means Implementation of K-Means in Python Implementation of K-Means in R Choosing Right Value for K Profiling Market Segments using K-Means Clustering Hierarchical Clustering Implementation of Hierarchial Clustering DBSCAN Defining Similarity between clusters Build Better and Accurate Clusters with Gaussian Mixture Models
Understand Basics of Recommendation Engine with Case Study
8 Ways to Improve Accuracy of Machine Learning Models
Introduction to Dask Working with CuML
Introduction to Machine Learning Interpretability Framework and Interpretable Models model Agnostic Methods for Interpretability Implementing Interpretable Model Understanding SHAP Out-of-Core ML Introduction to Interpretable Machine Learning Models Model Agnostic Methods for Interpretability Game Theory & Shapley Values
Introduction to Machine Learning Interpretability Framework and Interpretable Models model Agnostic Methods for Interpretability Implementing Interpretable Model Understanding SHAP Out-of-Core ML Introduction to Interpretable Machine Learning Models Model Agnostic Methods for Interpretability Game Theory & Shapley Values
Introduction to AutoML Implementation of MLBox Introduction to PyCaret TPOT Auto-Sklearn EvalML
Pickle and Joblib Introduction to Model Deployment
Deploying Machine Learning Model using Streamlit Deploying ML Models in Docker Deploy Using Streamlit Deploy on Heroku Deploy Using Netlify Introduction to Amazon Sagemaker Setting up Amazon SageMaker Using SageMaker Endpoint to Generate Inference Deploy on Microsoft Azure Cloud Introduction to Flask for Model Deploying ML model using Flask
Model Deployment in Android Model Deployment in Iphone

Basics of Predictive modeling

Kunal Jain
Kunal Jain Last Updated : 27 Aug, 2021
3 min read

Imagine how the world would change when any advertisement you receive is only about a product you are interested in. How beautiful it would be to receive information only about relevant products? How efficient would it be when you get all the required grocery items in first aisle? How much can mankind gain by being able to predict your diseases by looking at historical medical record and current symptoms?

All of this can be done by using power of predictive analytics. Many companies are already using this and becoming better and sharper with their targeting. They are able to get more than 100% response uplift from their marketing campaigns by predicting the need of customers and communicating with relevant products only.

pretective modelling

So what is Predictive Analytics and how can it help?

According to Gartner:

Predictive modeling is a commonly used statistical technique to predict future behavior. Predictive modeling solutions are a form of data-mining technology that works by analyzing historical and current data and generating a model to help predict future outcomes

Simply put, predictive analytics uses past trends and applies them to future. For example, if a customer purchases a smart phone from a e-commerce website, he might be interested in it’s accessories immediately. He might be a potential customer for phone battery a few years down the line. Currently, chances of him buying accessory of a competitor smartphone are relatively bleak.

While the example might sound simple, imagine doing this for thousands of categories you might be selling. With in those thousands of categories, there might be multiple options (hundreds of covers, pouches, stylus…). Further, even if you have a thousand visitors every day (small number of many e-retailers), predicting the next purchase without data based decisioning for these customers might become impossible.

This is exactly where predictive analytics will come to your help (remember Amazon helping you out with, You might also like….).

I understand how predictive analytics can help, what do I do next?

If you are a business owner who wants to harness business analytics, you need to setup an Analytics team. I’ll cover details of setting this up sometime later. This post is for people wanting to learn the art of Predictive Analytics.

Following is a typical life cycle of building predictive models:

Steps to build a predictive model

Steps to build a predictive model

The first step in any predictive model is to collate data from various sources. This can be data you own about your customer (like pages visited in past, products purchased in past), or data which the customer has provided (e.g. Address, Name, Age etc.).

This data needs to be cleaned and arranged in a structure so that it can be analyzed easily. This structure needs to be in sync with various business hypothesis. For example, if business hypothesis is that particular age / gender group may have higher likelihood to purchase certain set of products, Age and  Gender needs to be attributed at customer level.

Once these data sets are ready, we then use various predictive modeling techniques and business understanding to come out with various business insights (nuggets of gold). These insights can then be used in marketing / web site layout to increase efficiency.

In one of the future posts, we will go through these steps using a data set and case study to bring out these aspects.

In the meanwhile, if you have any examples where predictive modeling has helped or a business problem where predictive modeling can help, please let me know.

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Kunal Jain
Kunal Jain

Kunal Jain is the Founder and CEO of Analytics Vidhya, one of the world's leading communities of Al professionals. With over 17 years of experience in the field, Kunal has been instrumental in shaping the global Al landscape. His expertise spans diverse markets, from developed economies like the UK to emerging ones like India, where he has successfully led and delivered complex data-driven solutions. As a recognized thought leader, Kunal has empowered countless individuals to realize their Al ambitions through his visionary approach to Al education and community building. Before founding Analytics Vidhya, Kunal earned both his undergraduate and postgraduate degrees from IIT Bombay and held key roles at Capital One and Aviva Life Insurance across multiple geographies. His passion lies at the intersection of analytics, Al, and fostering a thriving community of data science professionals.

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Responses From Readers

Clear

Siddharth
Siddharth

Can you share some real life examples and give us a detailed document , explaining each of the above steps mentioned by you.

123

Binit
Binit

Predictive modeling can also help in analyzing power consumption pattern of consumers.

123

sourav Datta
sourav Datta

yes I am also totally agree with siddharth. Sir could you please share detailed documents related to predictive modelling

123

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Top 10 Data Analytics Projects with Source Codes
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What is Predictive Analytics | An Introductory Guide For Data Science Beginners!
What is Predictive Analytics | An Introductory Guide For Data Science Beginners!

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