The Applications Of Cluster Analysis

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Cluster Analysis
Cluster analysis is the technique of grouping individuals into market segments on the basis of the multivariate survey information (Dolnicar, 2003). Market segmentation remains one of the most fundamental strategies for marketing. Organizations have to evaluate and choose the segments wisely as their target as this will determine how the organization will be in the marketplace. The quality of groupings management that an organization opts for is very paramount for the organizational success, and it calls for professional use of techniques to determine useful segments. Cluster analysis provides a plentiful of techniques employed in determining the number of segments and their characteristics (Wedel & Kamakura,
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The organizations may also find helpful information on the Internet as there are many organizations that put their data online.
2. Segmentation
After an organization gathers data from the market research, an organization then can embark on market segmentation. As companies cannot connect with all of their potential customers, they need to divide markets into groups of consumers, clients, or customers with similar needs or wants (Sarstedt & Mooi, 2014). In other words, it is the grouping together of potential customers by their willingness or their potential willingness in buying of the product you plan to sell. It is important also to note that customers should not only be willing to make purchases from your company but also they must also have sufficient income for them to qualify to become your customers. The variables, in this case, which are vital include gender, age, home ownership, or loyalty to a particular brand that you must overcome.
3. Carrying out market analysis
Once the relevant data is in hand, the next step is the carrying out of a final market analysis. In this phase, you ought to be looking at a specific customer base that you will have to target with your product. You need to do a keen observation to find out if among the clusters formed there are custgome4rs large enough to justify your targeted marketing. After identifying the customers that justify your criteria, and then you must start your marketing campaign. At this juncture, you
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