Cluster Analysis

Group 13Himansh Rakheja - 119278051

Abhishek Verma - 119278098Aniket Jain - 119278125

Maheshwar Pathania - 119278137

04/07/2023 SJMSOM, IIT Bombay 2

IntroductionWhat is a Cluster?

Groups relatively homogeneous within themselves and heterogeneous between each other

Why Cluster Analysis?Market SegmentationUnderstanding buyers behaviorReducing data

04/07/2023 SJMSOM, IIT Bombay 3

Steps to do a cluster analysis1. Indentify cluster variables2. Standardize variables, if required3. Choose how to measure distance4. Choose a clustering algorithm5. Determine the number of clusters6. Validate

04/07/2023 SJMSOM, IIT Bombay 4

Distance MeasuresEuclidean distanceSquared EuclideanCosine

Why Standardize?

04/07/2023 SJMSOM, IIT Bombay 5

CLUSTERING METHODS

Hierarchical

Agglomerative Divisive

Non Hierarchical

K-means

04/07/2023 SJMSOM, IIT Bombay 6

Plots used in Cluster AnalysisIcicle plot

Source: http://www.norusis.com/pdf/SPC_v13.pdf

04/07/2023 SJMSOM, IIT Bombay 7

Agglomerative plot

Source: http://www.norusis.com/pdf/SPC_v13.pdf

04/07/2023 SJMSOM, IIT Bombay 8

Scree Plot

Source: http://www.janda.org/workshop/factor%20analysis/SPSS%20run/SPSS08.htm

04/07/2023 SJMSOM, IIT Bombay 9

Dendogram

Source: http://www.norusis.com/pdf/SPC_v13.pdf

04/07/2023 SJMSOM, IIT Bombay 10

Thank you!