Marketing Analytics Terms: Chapter 7

For Blog Post #3 I am going to cover the different types of segmentation . This chapter was interesting to me because it sort of touched on the idea of social standings, upbringings, behaviors, etc. How someone grew up could completely change the way they purchase products. What’s even more interesting – to me at least – is that even people in the same household can feel differently about different products and the way they respond to marketing.

Cluster analysis: analytics technique for grouping people so that those in the same group are more like one another compared with those in other groups. Cluster analysis is also called classification analysis or numerical taxonomy.  In cluster analysis, there is no prior information about the group or cluster membership for any of the objects.

Concepts and stats associated with cluster analysis

  • Agglomeration schedule in cluster analysis gives information on the objects or cases being combined at each stage of the hierarchical clustering process.
  • Cluster Centroid is the mean value of a variable for all the cases or objects in a particular cluster.
  • A dendrogram is a graphical device for displaying cluster results.
  • Distances between cluster centers in cluster analysis indicate how separated the individual pairs of clusters are. The clusters that are widely separated are distinct and therefore desirable.
  • Similarity/distance coefficient matrix in cluster analysis is a lower triangle matrix containing pairwise distances between objects or cases.

Demographic segmentation:clustering consumers based on human population characteristics (e.g. age, gender, income, etc.) This concept is interesting for me because people of the same demographic can have such different opinions! One of my best friends and I share a birthday, went to the same high school, are both male, but I know we have different opinions in products. He likes simple graphics and would be drawn to something more plain; whereas I would rather spend money on something that has a lot of character to it. So, even though we would fit into the same demographic segment, the products that would be targeted towards us wouldn’t catch both of our eyes. Demographic segmentation is helpful in mass marketing, and is one of the best ways to diversify individuals.

It’s important to note that behavioral data doesn’t exist independently from other segmentation data. Characteristics such as a customer’s age, gender, location, and social class often correlate to certain behavioral data – but not always.

Behavioral segmentation: the process of dividing the total market into smaller homogeneous groups based on customer buying behavior. Some behaviors that marketers look at when segmenting customers include readiness to purchase, level of loyalty, and frequency of interactions with a brand.

Psychographic segmentation: a method used to group prospective, current or previous customers by their shared personality traits, beliefs, values, attitudes, interests, and lifestyles and other factors. These characteristics may be observable or not. According to Directive Group, an Internet Marketing Firm, one can accomplish this type of segmentation in three ways:

  • primary market research
  • “down and dirty” market research
  • marketing artificial intelligence

Segmentation is a great way to divide the total market into smaller, similar groups.

Marketing Analytics Terms: Chapter 7

One thought on “Marketing Analytics Terms: Chapter 7

  1. muhkenzee13 says:

    When is comes to behavioral segmentation, I feel that it is so important for companies during the marketing process. Marketers can come up with different strategies when targeting each group.


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