Humans are able to deal with various types of values. Machine learning algorithms (with some exceptions) need numerical values. If we offer a string such as Ivan, unless we're using specialized software, the program won't know what to do. In this example, we're dealing with a categorical feature—names, probably. We can consider each unique value to be a label. (In this particular example, we also need to decide what to do with the case—is Ivan the same as ivan?). We can then replace each label with an integer—label encoding.

The following example shows how label encoding works:

This approach can be problematic, because the learner may conclude that there's an order. For example, Asia and North America in the preceding case differ by 4 after encoding, which is a bit counter-intuitive.