Cluster Analysis

Dr Loveleen Gaur
• This is a Marketing technique and we use STP
and for Segmentation we use this technique.

• Segmentation is done either on Demographics

or Psychographics

• Demographics Example: Baby Products,

Beauty Products etc..
• Few Examples like Internet Connectivity,
Prepaid or post paid plans, who will purchase
what??

• We will prepare SCALE on Lickert Scale which

will study your psychographics.
 Difference of cluster and Factor
• Factor Analysis and Cluster Analysis looks
same , the difference is “If we are grouping
people then it is called Clustering”

• If we are grouping Statements then it is called

Factor Analysis
• In SPSS it is found in :

• Analyse -> Classify and there are mainly of two

types 1. Hierarchical 2. K-Means
 Hierarchichal
It will give you broadly about people.

Here in SPSS Click on “Cases” for People and

“Variables” for Statements.

Click on Plots -> Dendogram.

Analysis : There are roughly 5 Clusters which is further

evaluated by K-Means
 K –means Clustering
• It will tell the final number of clusters
• Analyse -> Classify -> K-means

• Lets analyse for 4 cluster in this case. Click on

Iterate and put 100 iteration.
• We also need ANOVA Table (This will give output
of statement which differ for these clusters) If any
statement which is common in all the clusters will
not be differentiating factor and should be
removed.
 ANOVA
Cluster Error
Mean Square df Mean Square df F Sig.
1.I prefer to use email rather than 3.317 3 1.266 16 2.621 .086
write a letter
2.I feel that quality products are 1.406 3 1.396 16 1.007 .415
always priced high
3.I think twice before I buy anything 2.739 3 1.599 16 1.713 .205

4.TV is a major source of .489 3 1.158 16 .422 .740

entertainment
5.A car is a necessity than a luxury 2.322 3 1.640 16 1.416 .275

6.I prefer fast food and ready to use 1.100 3 1.619 16 .680 .577
products
7.People are more health conscious 7.400 3 .813 16 9.108 .001
today
8.Entry of foreign companies has 7.522 3 .874 16 8.607 .001
increased the efficiency of Indian
companies
9.Women are active participant in 7.050 3 .787 16 8.952 .001
purchase decisions
10.I believe politicians can play a 1.550 3 1.472 16 1.053 .396
positive role
11.I enjoy watching movies 1.417 3 1.269 16 1.117 .372
12.If I get a chance, I would like to 5.239 3 1.077 16 4.864 .014
settle abroad
13.I always buy branded products 4.972 3 1.252 16 3.971 .027

14.I frequently go out on weekends 4.972 3 1.252 16 3.971 .027

15.I prefer to pay by credit card 6.050 3 .866 16 6.989 .003

rather than in cash
 Number of Cases in each Cluster
Cluster 1 5.000
2 6.000
3 5.000
4 4.000
Valid 20.000
Missing .000