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Practical Predictive Analytics by Ralph Winters

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Clustering is used in diverse industries

Clustering is often related to other terms that you may hear in different industries:

  • In marketing and sales, you will hear the term product segmentation, which refers to how we cluster people according to their product preferences along various dimensions. It can also refer to a customer's willingness to buy a product with the ultimate goal of being able to cluster customers into those two groups (willing and not willing) and only marketing to those customers who we predict are willing to buy.
  • An insurance company might cluster customers according to how often they file a claim, or cluster customers according to a certain risk profile.

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