Customer Segmentation Analysis Using Clustering Algorithms

Customer segmentation has been deployed as a prudent marketing strategy by companies to ensure that their investments are less risky and more judicious. Segmenting customers helps the companies to divide the customers into groups that reflect similarity and maximize the value of each customer to the business. The main goal of this research is to use a machine learning clustering approach called K-means clustering to accomplish consumer segmentation. Besides, the research work is also focused on performing exploratory data analysis on the given dataset. To group the customers into clusters, a K-means clustering algorithm is performed on the customer dataset. To achieve optimization and validation of the clusters, popular heuristic, interpretation, and approximation methods have been included in this paper. Further, for analyzing and visualizing the important facets of the customer dataset and the operation of the K-means algorithm, the paper presents some colorful and informative representations. The implementation of this research work has been done in the R programming language. The outcome of this work includes visualizing the segments of the mall customers in the form of clusters based on their spending scores and annual incomes. Furthermore, a better customer segmentation could be achieved by taking product reviews and customer feedback into consideration. Nevertheless, customer segmentation remains a prospective topic for many researchers and companies due to dynamic customer behavior.