Exploring Customer Segmentation in the Context of Market Analysis

Market Analysis is a key essential tool used by businesses to identify their target customers, improve market experience, and stay competitive in the market. A key structure used in market analysis is Customer Segmentation. Customer segmentation helps economists to understand their customers better by grouping them into different segments based on their similar characteristics, preferences, etc. In this study, we segmented clients based on their preferences using several clustering approaches and algorithms. The resulting clusters have been used to build a recommendations model for marketing strategies. The clustering result also provided insight into which channel more demands were made. The performance achieved a 75.1 percent silhouette score and 178.7 Calinski-Harasbaz score clustering result for the BIRCH clustering algorithm we used. Finally, the conclusion has been drawn as to how effective customer segmentation based on behavioral traits is more effective, and how it serves as a vital tool in market analysis.