Cluster analysis It is a class of techniques used to classify cases into groups that are
Relatively homogeneous within themselves and
Heterogeneous between each other Homogeneity (similarity and heterogeneity (dissimilarity) are measured on the basis of a defined set of variables
These groups are called clusters
Market segmentation
Cluster analysis is especially useful for market segmentation Segmenting a market means dividing its potential consumers into separate sub-sets where
Consumers in the same group are similar with respect to a given set of characteristics
Consumers belonging to different groups are dissimilar with respect to the same set of characteristics
This allows one to calibrate the marketing mix differently according to the tar Consumer grou