Cluster Analysis:

Customer clustering analysis is the use of a mathematical model in the context of customer
segmentation to identify groups of comparable consumers based on identifying the smallest
variations among customers within each group. "Customer archetypes" or "personas" are the
names given to these homogeneous groups.
The purpose of cluster analysis in marketing is to precisely segment clients to personalize
marketing to them more successfully. The mathematical approach k-means cluster analysis,
often known as scientific segmentation, is a widely used cluster analysis technique. The
resulting clusters help to improve consumer modeling and predictive analytics. They are also
used to target customers with offers and incentives that are specific to their wants,
requirements, and preferences.
There are no predefined rules for the process; the customer types that already exist are
revealed by the data.

Advantage of Cluster Analysis:

Customer clustering analysis has the benefit of assisting organizations in better comprehending
their clientele and their requirements. Businesses can establish customized marketing and
product strategies by identifying patterns in customer behavior, interests, and needs by
grouping customers who share those traits.
For instance, clustering analysis can assist firms in determining which goods or services are
most well-liked by clientele groups as well as which clients are more likely to make repeat
purchases or stick around. This can assist organizations in focusing their marketing efforts on
customer segments, resulting in more successful marketing and more sales.
Moreover, clustering research can assist companies in discovering new client segments they
would not have previously thought of, opening chances for growth and market expansion.
The main benefit of customer clustering analysis is that it can assist organizations in learning
more about their clients and creating focused strategies that can boost client satisfaction and
profitability.

References:
https://www.optimove.com/resources/learning-center/customer-segmentation-via-cluster-
analysis
https://towardsdatascience.com/customer-segmentation-using-k-means-clustering-
d33964f238c3
https://study.com/learn/lesson/cluster-analysis-market-segmentation-relationship-steps-
examples.html