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Cluster Analysis

Cluster Analysis

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Cluster Analysis

Dr Neeraj Kaushik TIT&S Bhiwani

Selecting a Technique
Yes A re th e re d e p e n d e n t v a r ia b le s in th e p r o b le m ? Yes

Interdependent Variable
N o

No

1 Dependent Variable

Is th e re m o re th a n o n e ?

>1 Dependent Variable
A re th e v a r ia b le s m e tr ic o r n o n m e tr ic ?

Is th e d e p e n d e n t v a r ia b le m e tr ic o r n o n m e tric ?

A re th e d e p e n d e n t v a r ia b le s m e tr ic o r n o n m e tr ic ? N onm e tr ic

Nonm e tic A re th e in d e p e n d e n t v a r ia b le s m e tr ic o r n o n - m e tr ix ?

M e tric

M e tr ic

M e tr ic

A re th e in d e p e n d e n t v a r ia b le s m e t r ic o r n o n - m e tr ix ?

A re th e in d e p e n d e n t v a r ia b le s m e tr ic o r n o n - m e tr ix ?

N onm e tric

M e tr ic

N onm e tr ic

M e tr ic

N onm e tric

Nonm e tr ic

M e tric

M u ltip le C la s s ific a tio n A n a ly s is C a n o n ic a l A n a ly s is

M u ltip le D is c r im in a n t A n a ly s is L o g it & P r o b it A n a ly s is

M u ltip le R e g r e s s io n A n a ly s is

M u ltip le R e g r e s s io n A n a ly s is M u ltip le C la s s ific a tio n A n a ly s is C o n jo in t A n a ly s is M AN O VA C o n jo in t A n a ly s is

N o n m e tric F a c to r A n a ly s is N o n m e tric C lu s te r A n a ly s is

F a c to r A n a ly s is C lu s te r A n a ly s is M u lt id im e n s io n a l S c a lin g

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Cluster Analysis
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.

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Cluster Analysis

Usage
 

Market Segmentation Grouping of respondents

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Cluster Analysis
Clustering Procedures Hierarchical Clustering Non Hierarchical Clustering Other: Two Step Method

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Hierarchical Clustering Procedures
Hierarchical Clustering
Agglomerative Linkage Method Single Linkage Complete Linkage Average Linkage Variance Method Ward’s Method Divisive Centroid Method

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Linkage Methods of Clustering

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Non-Hierarchical Clustering Procedures
Non Hierarchical Clustering
Sequential Threshold Parallel Threshold Optimizing Partitioning

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Example: 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)
Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Statements
1.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
Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Statements
8.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
Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Data Analysis

   

20 respondents answered the questionnaire. Data file First use Hierarchical Clustering Use Dendogram in Plots Then use K-means Clustering

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Only applicable for Initial Analysis: To determine no. of clusters

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

K-means Cluster Analysis

 

Use K-means Cluster Analysis & Provide no. of required clusters Method: Classify only Save-Cluster membership of every case

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Output of K-means Cluster
Cluster membership saved in Data file by using Save Option.

Clusters Cluster 1 Cluster 2 Cluster 3 Cluster 4

Cases 1,2,9,14,15 6,8,13,16,17,18 7,10,11,19,20 3,4,5,12

No. of cases 5 6 5 4

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Response Scale
    

1 2 3 4 5

Strongly Agree Agree Neither agree nor disagree Disagree Strongly Disagree

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Final Cluster Centers
Statements
1.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

1
2 2 4 3 4

2
4 3 2 3 4

3
3 2 3 3 3

4
3 3 4 3 3

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Final Cluster Centers
Statements
6.I prefer fast food and ready to use products 7.People are more health conscious today 8.Entry of foreign companies has increased the efficiency of Indian companies 9.Women are active participant in purchase decisions

1
4 2 2

2
4 4 2

3
3 1 5

4
4 4 3

3

2

2

5

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Final Cluster Centers
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 3 3 2 2 2 4 4 4 3 4 4 3 3 4 4 2 2 2 3 4 4 4 4 4

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Cluster-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 Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Cluster-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 Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Cluster-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 Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Cluster-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

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

More 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

Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

Presentation by:

Dr. Neeraj Kaushik
Asstt. Professor (Management Studies) The Technological Institute of Textile & Sciences Birla Colony Bhiwani-127021 Haryana kaushikneraj@gmail.com Website: http://titsbhiwani.org
Cluster Analysis: Dr Neeraj Kaushik, TIT&S Bhiwani

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