Data Mining and Predictive Analytics, 2nd Edition

Chapter 24Segmentation Models

In Part 6: Enhancing Model Performance, we examine methods that enable us to enhance the performance of our models. Here in this chapter, we learn about Segmentation Models, where a useful clustering or subdivision of the data set is found, allowing us to develop cluster-specific models for each segment, and thereby enhancing the overall efficacy of the model. In Chapter 25, we learn about ensemble methods, which combine the results from a set of classification models, in order to increase the accuracy and reduce the variability of the classification. Finally, in Chapter 26, we consider other types of ensemble methods, including voting and model averaging.

24.1 The Segmentation Modeling Process

Thus far, our models have been built to apply to all the records in the test data set, and by extension, to all the observations in the relevant data universe or population. However, in many applications, we can enhance the overall performance of our models, by

1. identifying subsets of the data which differ in predictable ways from other subsets of the data;
2. applying a unique, customized model to each subset.

The resulting set of models is often more efficacious, with a lower overall error rate, say, or a higher overall profit, than a single model applied universally across the population.

The process of identifying useful subsets can be accomplished using exploratory data analysis (EDA), or through clustering analysis. The resulting customized models, unique ...