Artificial Intelligence with Microsoft Power BI

Chapter 6. Cluster Analysis and Segmentation

At this very moment, you may be one of many people reading this book. Maybe you are a college student assigned the book for class or a junior analyst in finance looking to advance your career. You could also be a Power BI developer who bought a digital copy with professional development funds or a data scientist wanting a faster way to visualize data. Those are all examples of marketing personas: semi-fictional characters used to describe groups of customers with similar qualities or behaviors. Marketers then use these customer segments to better meet demand with the best product at the best place at the best price with the best promotion.

Customer segmentation has a long history in business, but the rise of the digital age made it easier than ever to make data-driven decisions about customers. The right kind of data can reverse the way customer segments are designed. Instead of forcing customers into predefined groups, machine learning can leverage customer data to build a model that clusters similar customers together. This can uncover previously unseen patterns in data to help a business offer a better product or service.

Cluster Analysis for Business

Creating marketing personas is not the only application of cluster analysis; in fact, there are many ways an organization can leverage this machine learning algorithm, including:

• Clustering customer reviews to detect themes for new product development

• Detecting suspected financial ...