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How Important Cluster Analysis can be for Brands

Posted on March 22, 2020 by jazminebatista

  Companies always want to get a better idea on what elements their consumers agree and disagree on, based on factors of the brand.  Many brands use cluster analysis for this type of market research. A cluster analysis is a group of data objectives/ variables that are alike or not alike to one another. The variables are chosen by the brand’s marketing research objectives, which can be attitudes, preferences, demographics, or buying behaviors. These objectives are problems that need solving and what hypotheses need to be proven correct or incorrect.

  Many brands need to know what their consumers are thinking, but it is impossible to do it with every single customer. They need to divide different markets into different groups of customers that have the same wants and needs. What this does is that it attracts the consumers into being a part of segments.  Most of the time, when brands make a cluster analysis, they base the research and the separation of the consumers on factors they feel or experience when purchasing a product/service. Each one of the clusters is customers who have similar homogeneous benefits when they are looking for a product. This allows brands to target their marketing campaigns so that they can promote and market the needs, wants, and benefits of the product towards a specific customer segment. These are all factors that help brands create their market segmentation, and experiment with different consumers of their market.

  Cluster analysis also helps brands understand their buyer behaviors. Essential factors like brand loyalty, frequency to purchase, and the importance of price are measures that help divide the consumers into these different segments. It can also help brands identify new product opportunities. With cluster analysis, you are grouping products, services, and brands, which can lead to analyzing competitive sets against different brands within a market. Brands within the same cluster are more competitive against each other. Brands aren’t as competitive to other companies that are a part of other clusters since they might have different goals. A brand can be looking for new offers to offer consumers when other competitors can be looking to identify a new potential product or service.

  I have been working on the management side of a fitness studio for about four years. With so many competitors in the fitness industry, we are always looking for ways to stand out from the competition. For example, a new trend in the fitness industry is only to serve one gender, many new gyms only allow women to become members, compared to my studio, where we allow both men and women to be clients. This is an advantage that we gather from a cluster analysis; clients feel like many of the studios that have this rule makes it sexist, which can lower their brand loyalty or brand relationship. A cluster analysis allows companies to come to conclusions about many objectives they might not have answers to. With these conclusions, they can increase their revenue and increase their market share and surpass their competitors.

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