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Cluster analysis (in marketing)
'''Cluster analysis''' is a class of [[statistics|statistical]] techniques that can be applied to data that exhibits “natural”&#8220;natural&#8221; groupings. Cluster analysis sorts through the raw data and groups them into clusters. A '''cluster''' is a group of relatively homogeneous cases or observations. Objects in a cluster are similar to each other. They are also dissimilar to objects outside the cluster, particularly objects in other clusters. 

The diagram below illustrates the results of a survey that studied drinkers’&#8217; perceptions of spirits (alcohol). Each point represents the results from one respondent. The research indicates there are four clusters in this market.

<!---------------------------Diagram of Clusters------------------------->  
<div style="float:center;width:350px;margin-left:5.5em;text-align:center"> [[image:PerceptualMap2.png|alt text]]<br>''Illustration of clusters''</div>
(contracted; show full)
****examples:
*****'''Centroid methods''' - clusters are generated that maximize the distance between the centers of clusters (a centroid is the mean value for all the objects in the cluster)
*****'''Variance methods''' - clusters are generated that minimize the within-cluster variance
******example:
*******'''Ward
’&#8217;s Procedure''' - clusters are generated that minimize the squared Euclidean distance to the center mean
*****'''Linkage methods''' - cluster objects based on the distance between them
******examples:
*******'''Single Linkage method''' - cluster objects based on the minimum distance between them (also called the nearest neighbour rule)
*******'''Complete Linkage method''' - cluster objects based on the maximum distance between them (also called the furthest neighbour rule)
*******'''Average Linkage method''' - cluster objects based on the average distance between all pairs of objects (one member of the pair must be from a different cluster)


''See also : [[marketing]], [[marketing research]], [[factor analysis]], [[multi dimensional scaling (in marketing)|multi dimensional scaling]], [[quantitative marketing research]], [[positioning (marketing)|positioning]], [[perceptual mapping]]''

[[Category:Psychometrics]]
[[Category:Marketing]]
[[Category:Marketing research]]
[[category:Product management]]⏎
[[category:Business]]