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Abstract Details

Activity Number: 14
Type: Topic Contributed
Date/Time: Sunday, July 29, 2012 : 2:00 PM to 3:50 PM
Sponsor: Section for Statistical Programmers and Analysts
Abstract - #306424
Title: Developing a Demand Framework to Inform Customer Strategy: Application of Cluster Analysis in CPG Industry
Author(s): Belinda Zeng and Mike Zenor*+
Companies: The Nielsen Company
Address: 150 N Martingale Road, Schaumburg, IL, 60173,
Keywords: Cluster Analysis ; CPG Industry ; Multivariate Segmentation

The advent of customer-keyed loyalty programs has provided a rich source of analytical data for retailers and manufacturers in the CPG industry. Identifying core types of transactions and customers is a powerful framework for helping practitioners market the right products to the right customers at the right time. It helps address the following questions:

1.What are the product affinities that separate one type of shopping trip from the other? 2.What are the need-states (key drivers) underlying each member's purchasing behavior and how likely they migrate over member life cycle? 3.What products and trips are "missing" from a customer's purchase history? 4.What action can retailers take to influence buyer destination?

Cluster Analysis is an excellent statistical tool for multivariate segmentation. We will discuss various clustering methods applied to a major retail client's loyalty member base, along with modeling assumptions, data preparation and programming techniques. Several extensions of member clustering will be briefly introduced as well such as collaborative filters and consumerization. Business interpretation will be provided within the context of the CPG industry.

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