Research Topics:

Demographic Analysis | Lifestyle Research/Clustering | Multivariate Analysis

Content Type:

Glossary

Cluster Analysis Definition

A multivariate statistical classification technique for discovering whether the individuals of a population fall into different groups by making quantitative comparisons of multiple characteristics. The differences within any group should be less than the differences between groups. Often used for consumer segmentation and brand positioning.

Cluster analysis is a statistical technique that segments a heterogeneous, or diverse, group of data points into smaller, more homogeneous, or alike, clusters based on similarities in various variables. These variables could include customer demographics, purchase behaviors, preferences and other relevant data. In other words, this statistical classification method discovers whether the individuals of a population fall into different groups by making quantitative comparisons of multiple characteristics. The differences within any group should be less than the differences between groups. The goal of the analysis is to uncover meaningful patterns within the data that help marketing professionals better understand target audiences and make informed decisions. The analysis goes beyond simple demographics, though, allowing for the discovery of uncover hidden patterns and behaviors within a customer base. This method moves beyond generalized strategies and adopts a more targeted approach that caters to the unique preferences and needs of different customer segments.

Who relies on cluster analysis?

Marketing professionals, market researchers, data analysts and companies across various industries rely on cluster analysis for insights into customer segments. Findings can enhance marketing strategies, as well as help target campaigns and create products or services that meet the wants and needs of specific customer groups.

Why should I care about cluster analysis?

Cluster analysis can identify distinct customer segments that empowers marketing professionals to customize marketing efforts, create personalized purchasing experiences and improve resource allocation. The goal is to boost improved customer satisfaction and business performance.