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Clustering Consumer Behavior

1282 Words6 Pages

Clustering of Purchase Transactions to Detect Segments of Customer Behavior

AM.Helmy,
1 Assistant Lecturer, Institute of Statistical Studies & Research, Cairo University, 12613 Cairo, Egypt.

In the retail industry, customers have different attitude toward the same product category, leading to different purchasing behavior on that category. Purchasing portfolio, which is a pattern that represent purchasing behavior for customers through category collection in store, are varying among consumers. This paper proposes an approach for clustering customers’ purchase transactions cross product categories to detect different segments of customer behavior. The technique to segment customers by their purchasing portfolio has been designed and illustrated …show more content…

However, to our knowledge, there are few studies considering customer’s purchase behavior in interaction among different products specifically in the retail market of computer devices and accessories. According to MY DO [1], market segmentation is becoming very familiar and essential to every marketer in the process of designing and implementing an effective target-marketing strategy. Therefore, the motivation for her work [1] is to discover a segmentation based on purchasing behavior among whole range of products, which is called purchasing pattern. The Purchasing pattern include list of categories where a certain customer purchases and also consumption behavior on these …show more content…

A group of customers that have homogenous behavior will have similar values of variable-set. Therefore, in order to test our hypothesis “In the market of computer devices we can find groups of customers that have homogenous purchase behavior inside each group and different from other groups cross whole range of product categories”, it is necessary to calculate similar values of variable-set in certain customer groups. Recency, Frequency, and Monetary is considered as three dimensions to investigate customer behavior. Frequency is number of times in total that customer purchases a specific category in a review periods. However, frequency can be affected by customer’s size, which leads to different amount of demand. Therefore, instead of using frequency, percentage of frequency is used. The variable is defined as in (1) as a percentage of frequency for purchasing a certain category divided by total purchasing occasions of that

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