BANA Exam Q9

BANA Exam – Question 9 The BathSoap_2020.xls file was analysed according to specified instructions, and the results of all three models are provided below. 1) The k-means clustering algorithm has been applied to the selected variables, and the process along with the obtained results are presented below: Process of k-means cluster with 3 selected variables

Cluster model Example set of the Cluster model

3) The cluster that has the highest probability of purchasing under the selling proposition category 5 ( PropCat 5 – Any Beauty) is cluster 2 . The interpretation of cluster 2 is as follows  Average SEC (Socio-Economic Class): 2.063  This suggests a moderate to high socio-economic class within Cluster 2.  Average Age: 3.275  The average age is moderate, indicating a mix of different age groups within this cluster.  Average Education: 5.290  The average education level is relatively high, suggesting that individuals in this cluster have a higher level of education.  Average HS (Household Size): 4.486  The average household size is around 4.5, indicating the average number of individuals in households within this cluster.  Average Affluence Index: 24.455  A relatively high average affluence index suggests that individuals in this cluster may belong to a more affluent segment.  Average No. of Brands: 3.988  The average number of brands purchased is close to 4, indicating a moderate diversity in brand choices within this cluster.  Average Brand Runs: 17.886  The average number of brand runs (streaks of purchasing the same brand) is relatively high, suggesting a degree of brand loyalty or consistent brand choices within this cluster.  Average Avg. Price: 12.929  The average price per 100 grams of cake is around 12.93 rupees, indicating the average spending pattern on cake products within this cluster.  Count Cluster: 255  There are 255 records or individuals in Cluster 2. Interpretation:  Cluster 2 appears to represent a demographic with a moderately high socio-economic class, diverse age groups, higher education levels, and a relatively affluent segment.  Purchase behaviour within this cluster suggests a moderate diversity in brand choices with a notable degree of brand loyalty or consistent brand purchasing.  The average spending on cake products is moderate, with an average price of around 12.93 rupees. 4) The cluster that has the highest probability of purchasing under the selling proposition category 5 ( PropCat 7 – Any Herbal) is cluster 2 . The interpretation of cluster 2 is as follows  Average SEC (Socio-Economic Class): 2.063  This suggests a moderate to high socio-economic class within Cluster 2.  Average Age: 3.275  The average age is moderate, indicating a mix of different age groups within this cluster.  Average Education: 5.290  The average education level is relatively high, suggesting that individuals in this cluster have a higher level of education.  Average HS (Household Size): 4.486  The average household size is around 4.5, indicating the average number of individuals in households within this cluster.  Average Affluence Index: 24.455  A relatively high average affluence index suggests that individuals in this cluster may belong to a more affluent segment.  Average No. of Brands: 3.988

 The average number of brands purchased is close to 4, indicating a moderate diversity in brand choices within this cluster.  Average Brand Runs: 17.886  The average number of brand runs (streaks of purchasing the same brand) is relatively high, suggesting a degree of brand loyalty or consistent brand choices within this cluster.  Average Avg. Price: 12.929  The average price per 100 grams of cake is around 12.93 rupees, indicating the average spending pattern on cake products within this cluster.  Count Cluster: 255  There are 255 records or individuals in Cluster 2. Interpretation:  Cluster 2 appears to represent a demographic with a moderately high socio-economic class, diverse age groups, higher education levels, and a relatively affluent segment.  Purchase behaviour within this cluster suggests a moderate diversity in brand choices with a notable degree of brand loyalty or consistent brand purchasing.  The average spending on cake products is moderate, with an average price of around 12.93 rupees. 5) The selection of the optimal number of clusters (K) was assessed by evaluating the average centroid distances for different values of K. Specifically, for K=2, the average centroid distance was 0.120; for K=3, it decreased to 0.066; for K=4, it further reduced to 0.041, and for K=5, it reached 0.031. The notable decrease in average centroid distance from K=3 to K=4 or K=4 to K=5 is not as substantial as the improvement observed when transitioning from K=2 to K=3. Therefore, based on the criterion of minimizing average centroid distance, K=3 emerges as the optimal choice for this cluster model.