Chapter 5: Data Mining with Cluster Analysis

What is Data Mining?

The process of finding patterns in large data sets

What is Segmentation?

Used in marketing to divide the total population of customers into smaller, relatively homogeneous groups

What is Demographic Data?

Include characteristics like gender, age, income, ethnicity, residence, political affiliation, education level, and languages spoken

What is Psychographic Data?

Psychological characteristics, values, and lifestyles of people

What is Behavioral Data?

Actions and interactions of consumers, including usage rate and patterns (product usage, web or mobile app usage, click patterns,..)

What is Targeting?

Identifying which segment(s) to pursue and appealing uniquely to particular segments of customers

What is Positioning?

A business strategy that establishes the way a customer perceives a product or firm relative to the marketplace

What is Cluster Analysis?

Puts objects such as people into different segments that are created to be as homogenous as possible

What is K-means Cluster Analysis?

Iterative technique that seeks to allocate each data point to the cluster closest to it (out of k clusters)