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SPSS Tutorial Cluster Analysis

Fundamental of Reasearch (ITM University)

Studocu is not sponsored or endorsed by any college or university

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SPSS Tutorial

AEB 37 / AE 802
Marketing Research Methods
Week 7

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Cluster analysis
Lecture / Tutorial outline
• Cluster analysis
• Example of cluster analysis
• Work on the assignment

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Cluster Analysis
• It is a class of techniques used to
classify cases into groups that are
relatively homogeneous within
themselves and heterogeneous
between each other, on the basis of
a defined set of variables. These
groups are called clusters.

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Cluster Analysis and

marketing research
• Market segmentation. E.g. clustering of
consumers according to their attribute
preferences
• Understanding buyers behaviours.
Consumers with similar
behaviours/characteristics are clustered
• Identifying new product opportunities.
Clusters of similar brands/products can help
identifying competitors / market opportunities
• Reducing data. E.g. in preference mapping

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Steps to conduct a
Cluster Analysis
1. Select a distance measure
2. Select a clustering algorithm
3. Determine the number of clusters
4. Validate the analysis

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2
1

1
REGR factor score 1 for analysis

-1

-2

-3

-4
-3 -2 -1 0 1 2 3 4

REGR factor score 2 for analysis 1

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Defining distance: the

Euclidean distance
 x  xkj 
n
2
Dij  ki
k 1

D ij distance between cases i and j

xki value of variable Xk for case j
Problems:
• Different measures = different weights
• Correlation between variables (double
counting)
Solution: Principal component analysis

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Clustering procedures
• Hierarchical procedures
– Agglomerative (start from n clusters,
to get to 1 cluster)
– Divisive (start from 1 cluster, to get to
n cluster)
• Non hierarchical procedures
– K-means clustering

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Agglomerative clustering

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Agglomerative
clustering
• Linkage methods
– Single linkage (minimum distance)
– Complete linkage (maximum distance)
– Average linkage
• Ward’s method
1. Compute sum of squared distances within clusters
2. Aggregate clusters with the minimum increase in the
overall sum of squares
• Centroid method
– The distance between two clusters is defined as the
difference between the centroids (cluster averages)

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K-means clustering
1. The number k of cluster is fixed
2. An initial set of k “seeds” (aggregation centres) is
provided
• First k elements
• Other seeds
3. Given a certain treshold, all units are assigned to
the nearest cluster seed
4. New seeds are computed
5. Go back to step 3 until no reclassification is
necessary
Units can be reassigned in successive steps
( opt i mi si ng par t i oni ng )

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Hierarchical vs Non
hierarchical methods
Hierarchical Non hierarchical
clustering
clustering
• No decision about the
number of clusters • Faster, more reliable
• Problems when data • Need to specify the
contain a high level of number of clusters
error (arbitrary)
• Can be very slow • Need to set the initial
• Initial decision are seeds (arbitrary)
more influential (one-
step only)

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Suggested approach
1. First perform a hierarchical
method to define the number of
clusters
2. Then use the k-means procedure
to actually form the clusters

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Defining the number of

clusters: elbow rule (1)
Agglomeration Schedule
n
Stage Cluster First
Stage Number of clusters Cluster Combined Appears
0 12 StageCluster 1 Cluster 2CoefficientsCluster 1 Cluster 2Next Stage
1 11 1 4 7 .015 0 0 4
2 10 2 6 10 .708 0 0 5
3 9 3 8 9 .974 0 0 4
4 8 4 4 8 1.042 1 3 6
5 7 5 1 6 1.100 0 2 7
6 6 6 4 5 3.680 4 0 7
7 5 7 1 4 3.492 5 6 8
8 4 8 1 11 6.744 7 0 9
9 3 9 1 2 8.276 8 0 10
10 2 10 1 12 8.787 9 0 11
11 1 11 1 3 11.403 10 0 0

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Elbow rule (2): the

scree diagram
12

10

8
Distance

0
11 10 9 8 7 6 5 4 3 2 1
Number of clusters

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Validating the
analysis
• Impact of initial seeds / order of
cases
• Impact of the selected method
• Consider the relevance of the
chosen set of variables

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SPSS Example

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1.5 MATTHEW
JULIA

1.0 LUCY
JENNIFER
.5 NICOLE

0.0

JOHN
-.5 PAMELA
THOMAS ARTHUR

-1.0
Component2

-1.5 FRED

-2.0
-1.5 -1.0 -.5 0.0 .5 1.0 1.5 2.0

Component1

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Agglomeration Schedule

Stage Cluster First

Cluster Combined Appears
Stage Cluster 1 Cluster 2 Coefficients Cluster 1 Cluster 2 Next Stage
1 3 6 .026 0 0 8
2 2 5 .078 0 0 7
3 4 9 .224 0 0 5
4 1 7 .409 0 0 6
5 4 10 .849 3 0 8
6 1 8 1.456 4 0 7
7 1 2 4.503 6 2 9
8 3 4 9.878 1 5 9
9 1 3 18.000 7 8 0

Number of clusters: 10 – 6 = 4

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1.5 MATTHEW
JULIA

1.0 LUCY
JENNIFER
.5 NICOLE

0.0

JOHN
-.5 PAMELA
THOMAS ARTHUR
Cluster Number of Ca

-1.0 4
Component2

3
-1.5 FRED
2

-2.0 1
-1.5 -1.0 -.5 0.0 .5 1.0 1.5 2.0

Component1

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Open the dataset

supermarkets.sav
From your N: directory (if you saved it
there last time
Or download it from:
http://www.rdg.ac.uk/~aes02mm/
supermarket.sav
• Open it in SPSS

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The supermarkets.sav
dataset

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Run Principal
Components Analysis
and save scores
• Select the variables to perform the
analysis
• Set the rule to extract principal
components
• Give instruction to save the
principal components as new
variables

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Cluster analysis:
basic steps
• Apply Ward’s methods on the
principal components score
• Check the agglomeration schedule
• Decide the number of clusters
• Apply the k-means method

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Analyse / Classify

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Select the component

scores

Select from here Untick this

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Select Ward’s algorithm

Select
method here

Click here
first

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Output: Agglomeration
schedule

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Number of clusters
Identify the step where the “distance coefficients” makes a bigger
jump

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The scree diagram

(Excel needed)
Distance

800

700

600

500

400

300

200

100

0
118

120

122

124

126

128

130

132

134

136

138

140

142

144

146

148
Step

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Number of clusters
Number of cases 150
Step of ‘elbow’ 144
__________________________________
Number of clusters 6

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Now repeat the

analysis
• Choose the k-means technique
• Set 6 as the number of clusters
• Save cluster number for each case
• Run the analysis

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K-means

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K-means dialog box

Specify
number of
clusters

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Save cluster membership

Click here
first Thick here

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Final output

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Cluster membership

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Component meaning
(tutorial week 5)
4. Organic radio
Component Matrixa
listener
1. “Old Rich Big
Component
Spender” 3. Vegetarian TV
1 2 3 4 5
Monthly amount spent .810 lover
-.294 -4.26E-02 .183 .173
Meat expenditure
2. Family
.480
shopper
-.152 .347 .334 -5.95E-02
Fish expenditure .525 -.206 -.475 -4.35E-02 .140
Vegetables expenditure .192 -.345 -.127 .383 5. Vegetarian
.199 TV and
-.207web hater
% spent in own-brand
.646 -.281 -.134 -.239
product
Own a car .536 .619 -.102 -.172 6.008E-02
% spent in organic food .492 -.186 .190 .460 .342
Vegetarian 1.784E-02 -9.24E-02 .647 -.287 .507
Household Size .649 .612 .135 -6.12E-02 -3.29E-03
Number of kids .369 .663 .247 .184 1.694E-02
Weekly TV watching
.124 -9.53E-02 .462 .232 -.529
(hours)
Weekly Radio listening
2.989E-02 .406 -.349 .559 -8.14E-02
(hours)
Surf the web .443 -.271 .182 -5.61E-02 -.465
Yearly household income .908 -4.75E-02 -7.46E-02 -.197 -3.26E-02
Age of respondent .891 -5.64E-02 -6.73E-02 -.228 6.942E-04
Extraction Method: Principal Component Analysis.
a. 5 components extracted.

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Final Cluster Centers

Cluster
1 2 3 4 5 6
REGR factor score
-1.34392 .21758 .13646 .77126 .40776 .72711
1 for analysis 1
REGR factor score
.38724 -.57755 -1.12759 .84536 .57109 -.58943
2 for analysis 1
REGR factor score
-.22215 -.09743 1.41343 .17812 1.05295 -1.39335
3 for analysis 1
REGR factor score
.15052 -.28837 -.30786 1.09055 -1.34106 .04972
4 for analysis 1
REGR factor score
.04886 -.93375 1.23631 -.11108 .31902 .87815
5 for analysis 1

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Cluster interpretation
through mean component values
• Cluster 1 is very far from profile 1 (-1.34) and
more similar to profile 2 (0.38)
• Cluster 2 is very far from profile 5 (-0.93) and
not particularly similar to any profile
• Cluster 3 is extremely similar to profiles 3 and 5
and very far from profile 2
• Cluster 4 is similar to profiles 2 and 4
• Cluster 5 is very similar to profile 3 and very far
from profile 4
• Cluster 6 is very similar to profile 5 and very far
from profile 3

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Which cluster to
target?
• Objective: target the organic
consumer
• Which is the cluster that looks more
“organic”?
• Compute the descriptive statistics
on the original variables for that
cluster

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Representation of factors 1
and 4
(and cluster membership)
3

2
1
REGR factor score 4 for analysis

Cluster Number of Ca
0
6

5
-1
4

3
-2
2

-3 1
-3 -2 -1 0 1 2

REGR factor score 1 for analysis 1

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