CLUSTER ANALYSIS

An FMCG company desires to segment its target audience, based on their lifestyles, attitudes and
perceptions. In order to do this, they have initially conducted a preliminary research and identified
the variables that have a significant impact on buying behaviour for their products. These variables
were then converted into a questionnaire in the form of statements. Respondents were asked to
provide their responses to each statement on a 5 point Likert scale, where 1 mean strongly agree
and 5 means strongly disagree. An extract of the questionnaire and some data is provided below for
your analysis:

Ques1: Identify number of cluster from data provided.

Ques2: Determine which respondent belongs to which cluster, through

a) Hierarchal clustering process.

b) K means clustering process.

Identify the difference between the two.

Ques3: Identify the variables that distinguish the cluster at 90% confidence interval.

Ques4: Profile each segment based on their distinguishing characteristics.

Ques5: label each segment based on their dominant distinguishing characteristics. Justify your
answer.

Questionnaire:

1. I prefer email to letters.

2. I feel that quality comes at a price.
3. I think twice before I buy anything.
4. TV is a major source of entertainment.
5. A car is a necessity, not a luxury.
6. I prefer fast food and ready to use products.
7. People are more health conscious today.
8. Entry of foreign companies has increased efficiency of Indian companies.
9. Women are active participant in purchase decision.
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.

20 respondents were taken.