ABSTRACT
Market segmentation modeling is performed to gain insight into a company's customers' needs and wants to effectively market to their customers. A business database consists of heterogeneous segments. A cluster analysis of a business database identifies the segments. After a fruitful cluster analysis uncovers the segments, the next step is to understand the nature of the segments. This chapter presents an easy way to understand the segments to develop effective marketing strategies for targeting customers within segments and across segments. It illustrates the proposed technique and provides the corresponding SAS subroutines so data miners can add this worthy statistical technique to their toolkits. Market segmentation modeling—technically, cluster analysis—is the commonly used statistical method to gain insight into a company's customers' needs and wants to effectively market-n-sell customers. Based on the primary statistics, goodness-of-fit measures, and number of parameters, the statistician determines the best cluster solution.
