Cluster Analysis

Cluster AnalysisCluster Analysis

Dr Neeraj KaushikDr Neeraj Kaushik

TIT&S BhiwaniTIT&S Bhiwani

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Selecting a Technique Are

there dependentvariables in the

problem?

Isthere more

than one?

Arethe dependent

variables metric ornonmetric

?

Are thevariables metricor nonmetric?

Isthe dependent

variable metric ornonmetric

?

Non-metic Metric Metric

Non-metric

Metric

Are theindependent variablesmetric or non-metrix?



Non-metric

MetricNon-

metricMetric

Non-metric

MetricNon-metric

MultipleClassification

Analysis

CanonicalAnalysis

MultipleDiscriminant

Analysis

Logit & ProbitAnalysis

MultipleRegression

Analysis

MultipleRegression

Analysis

MultipleClassification

Analysis

ConjointAnalysis

MANOVAConjointAnalysis

NonmetricFactor

Analysis

NonmetricCluster

Analysis

Factor Analysis

Cluster Analysis

MultidimensionalScaling

Yes

Yes

No

No

1 Dependent Variable

>1 Dependent Variable

Interdependent Variable


ClusterCluster AnalysisAnalysis

Cluster Analysis is a multivariate technique ideally suited to segmentation applications.

The basic idea is to group similar objects together.

Generally interval scale variables are ideally suited for this analysis.



Usage Market Segmentation Grouping of respondents



Clustering Procedures

Hierarchical Clustering

Non Hierarchical Clustering

Other: Two Step Method


Hierarchical Clustering Hierarchical Clustering ProceduresProcedures

Hierarchical Clustering

Agglomerative Divisive

Linkage Method

Variance Method

Centroid Method

Single Linkage

Complete Linkage

Average Linkage

Ward’s Method


Linkage Methods of ClusteringLinkage Methods of Clustering


Non-Hierarchical Clustering Non-Hierarchical Clustering ProceduresProcedures

Non Hierarchical Clustering

SequentialThreshold

Parallel Threshold

OptimizingPartitioning


Example: XYZ Paint CompanyExample: XYZ Paint Company

A major Indian FMCG company wants to map the profile of its target audience in terms of lifestyle, attitudes and perceptions.

The company’s manager prepares a set of 15 statements.

Respondents have to answer on 5 point scale from 1(=Strongly Agree) to 5(=Strongly Disagree)


StatementsStatements1.I prefer to use email rather than write a letter

2.I feel that quality products are always priced high

3.I think twice before I buy anything

4.TV is a major source of entertainment

5.A car is a necessity than a luxury

6.I prefer fast food and ready to use products

7.People are more health conscious today


StatementsStatements8.Entry of foreign companies has increased the efficiency of Indian companies

9.Women are active participant in purchase decisions

10.I believe politicians can play a positive role

11.I enjoy watching movies

12.If I get a chance, I would like to settle abroad

13.I always buy branded products

14.I frequently go out on weekends

15.I prefer to pay by credit card rather than in cash


Data AnalysisData Analysis

20 respondents answered the questionnaire.

Data file First use Hierarchical Clustering Use Dendogram in Plots Then use K-means Clustering


Only applicable for Initial Analysis: To determine

no. of clusters


K-means Cluster AnalysisK-means Cluster Analysis

Use K-means Cluster Analysis & Provide no. of required clusters

Method: Classify only Save-Cluster membership of every

case


Output of K-means ClusterOutput of K-means Cluster

Clusters Cases No. of cases

Cluster 1 1,2,9,14,15 5

Cluster 2 6,8,13,16,17,18 6

Cluster 3 7,10,11,19,20 5

Cluster 4 3,4,5,12 4

Cluster membership saved in Data file by using Save Option.


Response ScaleResponse Scale

1 Strongly Agree 2 Agree 3 Neither agree nor disagree 4 Disagree 5 Strongly Disagree


Final Cluster CentersFinal Cluster CentersStatements 1 2 3 4

1.I prefer to use email rather than write a letter

2 4 3 3

2.I feel that quality products are always priced high

2 3 2 3

3.I think twice before I buy anything

4 2 3 4

4.TV is a major source of entertainment

3 3 3 3

5.A car is a necessity than a luxury

4 4 3 3


Final Cluster CentersFinal Cluster Centers

Statements 1 2 3 4

6.I prefer fast food and ready to use products

4 4 3 4

7.People are more health conscious today

2 4 1 4

8.Entry of foreign companies has increased the efficiency of Indian companies

2 2 5 3

9.Women are active participant in purchase decisions

3 2 2 5


Final Cluster CentersFinal Cluster Centers10.I believe politicians can play a positive role

3 4 3 3

11.I enjoy watching movies 3 4 4 4

12.If I get a chance, I would like to settle abroad

2 3 4 4

13.I always buy branded products 2 4 2 4

14.I frequently go out on weekends

2 4 2 4

15.I prefer to pay by credit card rather than in cash

4 3 2 4


Cluster-1Cluster-1 E-mail user Believes Quality products are charged high Prompt in buying things Believes Car as luxury Don’t prefer fast food & ready to use items Health conscious Believes in efficiency of Indian companies Ready to settle abroad Buy branded items & Enjoy weekend Prefer to pay by cash


Cluster-2Cluster-2 Write traditional ways of writing Take time while buying Believes Car as luxury Don’t prefer fast food & ready to use items Believes in efficiency of Indian companies Believes Women are active participant in buying No faith on politicians Don’t enjoy movies Don’t buy branded items Don’t go out on weekends


Cluster-3Cluster-3 Believes Quality products are charged high Health conscious No faith in efficiency of Indian companies Believes Women are active participant in buying Don’t enjoy movies No intention of settling abroad Buy branded items & Enjoy weekend Prefer to pay by cash


Cluster-4Cluster-4 Prompt in buying things Don’t prefer fast food & ready to use items Don’t feel that people are health conscious Don’t feel women are active participant in buying Don’t enjoy movies No intention of settling abroad Don’t buy branded items Don’t go out on weekends Prefer to pay by cash


More AnalysisMore Analysis Further analysis can be carried out by

looking at mean age of various clusters as well as other demographic variables.

Data file for assignment Listening Self Questionnaire


Presentation by:Presentation by:

Dr. Neeraj KaushikAsstt. Professor (Management Studies)

The Technological Institute of Textile & SciencesBirla Colony

Bhiwani-127021Haryana

[email protected] Website: http://titsbhiwani.org

Education

Cluster Analysis