Clustering and Data Segmentation

Abstract

Cluster analysis is basically a data reduction technique to reduce a large number of objects in groups or clusters in such a manner that objects belonging to one group or cluster are more similar to each other and more different from objects in another group or cluster. Clustering is used in business analytics to identify groups of customers that can be targeted with similar products, to understand products and markets, and basically to reduce data for an actionable strategy especially in cases where data are not sufficiently clean or exhaustive to create predictive models.