A Concise Guide to Market Research: Cluster analysis

Abstract

After reading this chapter you should understand: – The basic concepts of cluster analysis. – How basic cluster algorithms work. – How to compute simple clustering results manually. – The different types of clustering procedures. – The SPSS clustering outputs. Keywords Agglomerative and divisive clustering • Chebychev distance • City-block distance • Clustering variables • Dendrogram • Distance matrix • Euclidean distance • Hierarchical and partitioning methods • Icicle diagram • k-means • Matching coefficients • Profiling clusters • Two-step clustering Thaltegos (http://www.thaltegos.com) is a German management consulting company, focusing on analytical approaches for marketing, sales and after sales challenges in the automotive industry. Due to their industry experience, a major US car manufacturer commissioned Thaltegos to develop a segmentation concept of the European car market. Using cluster analysis, Thaltegos identified three distinct segments comprising light-weight compact cars, sports cars, and limousines. Using this segmentation concept, the automotive manu-facturer can derive concrete steps on how to position their new electric car in the market.