Statistical Word of the Week

Nov 12, 2013

Week #46 - Cluster Analysis

In multivariate analysis, cluster analysis refers to methods used to divide up objects into similar groups, or, more precisely, groups whose members are all close to one another on various dimensions being measured.

In cluster analysis, one does not start with any apriori notion of group characteristics. The definition of clusters emerges entirely from the cluster analysis - i.e. from the process of identifying "clumps" of objects.  Clustering is used in many fields, including customer segmentation.  An airline analyzing its customer data, for example, might find that there is a distinct cluster of passengers with the following characteristics:  travel weekly, travel mainly one or two short-haul routes, book at the last minute, don't check bags.

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