Python Machine Learning Cookbook

Building a customer segmentation model

One of the main applications of unsupervised learning is market segmentation. This is when we don't have labeled data available all the time, but it's important to segment the market so that people can target individual groups. This is very useful in advertising, inventory management, implementing strategies for distribution, mass media, and so on. Let's go ahead and apply unsupervised learning to one such case to see how it can be useful.

We will be dealing with a wholesale vendor and his customers. We will be using the data available at https://archive.ics.uci.edu/ml/datasets/Wholesale+customers. The spreadsheet contains data regarding the consumption of different types of items by their customers and our ...