DBSCAN (Density-Based Spatial Clustering of Applications with Noise) is a density-based clustering algorithm and is specifically used to detect noise points and anomalies in the dataset. Psychographic segmentation allows customers to be segmented based on lifestyle, interests and personality traits. In this blog post, we will perform psychographic segmentation with the DBSCAN algorithm using customer data and analyze the obtained insights.
The goal of the project
The aim of this project is to analyze customers' lifestyles and interests and segment them based on their similar psychographic patterns. In this way, special marketing strategies can be developed for each segment and customer satisfaction can be increased.
Data Sets to Use
Customers: Contains customer information. (CustomerID, Age, Gender, Region, Lifestyle, Interests)
Orders: Contains shopping information. (OrderID, CustomerID, PurchaseDate, PurchaseAmount)
OrderDetails: Contains shopping details. (OrderID, ProductCategory, CustomerType)
CustomerAcquisition: Contains customer acquisition information. (CustomerID, AcquisitionChannel, AcquisitionDate)
What is the DBSCAN Algorithm?
DBSCAN is an algorithm that clusters data points based on their density. The algorithm defines data points with a sufficient number of neighbors within a certain radius (epsilon) as seed points and creates clusters around these seed points. The main parameters of the DBSCAN algorithm are:
Epsilon (eps): Radius distance used to determine neighbors of a data point.
MinPts: The minimum number of neighbors required for a data point to be considered a seed point.
Characteristics of Segments and Benefits for Business
Customers with an Active Lifestyle and Sports Interest: This segment can be targeted for sports equipment and events.
Technology and Innovation Enthusiasts: These customers can be targeted for new technological products and innovative services.
Family and Home Oriented Customers: This segment can be targeted for home furnishings and family-oriented products.
Social and Entertainment Enthusiasts: These customers can be targeted for social events and entertainment services.
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