Research Topics:

Demographic Analysis | Demographic Profiles | Lifestyle Research/Clustering

Content Type:

Glossary

Cluster Definition

A category assigned to a neighborhood based on the assumption that the households share certain demographic, social and economic characteristics.

A diverse group of data points or subjects put into smaller, more homogeneous (alike) subgroups is called a cluster. Clusters have similar demographic, social and economic characteristics, as well similar behaviors or preferences among themselves. That said, they differ from other clusters. Cluster analysis provides an understanding of consumer diversity because it uncovers hidden patterns within large datasets, thus allowing marketing professionals to make informed decisions. What’s more, clusters help in the development of personalized marketing strategies, messaging, pricing strategies and enhanced customer experiences.

Who relies on clusters?

Marketing professionals, product managers, researchers and strategists use cluster analysis to gain insights into consumer behavior, preferences and needs. That information is valuable for tailoring marketing strategies and offerings to customer segments.

Why should I care about clusters?

Understanding cluster analysis identifies distinct customer segments, which helps marketing professionals to develop targeted marketing campaigns for specific groups of consumers.