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Using K-means method and spectral clustering technique in an outfitter’s value analysis

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Abstract

This study applies K-means method and spectral clustering technique in the customer data analysis of an outfitter in Taipei City, Taiwan. The data set contains transaction records of 551 customers from April 2004 to March 2006. The differences between the two clustering techniques mentioned here are significant. K-means method is more capable of dealing with linear separable input, while spectral clustering technique might have the advantage in non-linear separable input. Thus, it would be of interest to know which clustering technique performs better in a real-world case of evaluating customer value when the type of input space is unknown. By using cluster quality assessment, this study found that spectral clustering technique performs better than K-means method. To summarize the analysis, this study also suggests marketing strategies for each cluster based on the results generated by spectral clustering technique.

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Authors and Affiliations

  1. Manchester Business School, Booth Street West, Manchester, M15 6PB, UK

    En-Chi Chang

  2. Department of Business Administration, National Changhua University of Education, No. 2 Shida Road, Changhua City, Changhua, 500, Taiwan

    Shian-Chang Huang & Hsin-Hung Wu

Authors
  1. En-Chi Chang
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  2. Shian-Chang Huang
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  3. Hsin-Hung Wu
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Correspondence to Shian-Chang Huang.

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Chang, EC., Huang, SC. & Wu, HH. Using K-means method and spectral clustering technique in an outfitter’s value analysis. Qual Quant 44, 807–815 (2010). https://doi.org/10.1007/s11135-009-9240-0

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  • DOI: https://doi.org/10.1007/s11135-009-9240-0

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