Market segmentation using high-dimensional sparse consumers data

Jian Zhou, Linli Zhai, Athanasios A. Pantelous

Research output: Contribution to journalArticleResearchpeer-review

Abstract

Good segmentation contributes towards a better understanding of the market and customer demands. This study aims to develop a new methodological approach, integrating “Recency, Frequency and Monetary” with the sparse K-means clustering algorithm of Witten and Tibshirani (2010). The proposed approach is suitable for handling large, high-dimensional and sparse consumer data. Drawing on the proposed methodology, alongside data collection from the Chinese mobile telecommunications market, and considering specific services, our treatment is further assessed empirically and appears to provide robust results when compared to the Dolnicar, Kaiser, Lazarevski and Leisch (2012) biclustering of customers method. Following the attainment of a clear and robust market segmentation structure, our theoretical treatment and its empirical analysis provide a useful tool and valid methodology for marketers, and decision makers in general, to accurately determine the most profitable market segments.

Original languageEnglish
Article number113136
Number of pages17
JournalExpert Systems with Applications
Volume145
DOIs
Publication statusPublished - May 2020

Keywords

  • BCBimax algorithm
  • Mobile telecommunications industry
  • Precision marketing
  • RFM theory
  • Sparse K-means algorithm

Cite this

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Market segmentation using high-dimensional sparse consumers data. / Zhou, Jian; Zhai, Linli; Pantelous, Athanasios A.

In: Expert Systems with Applications, Vol. 145, 113136, 05.2020.

Research output: Contribution to journalArticleResearchpeer-review

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