Article Side

Online Article Directory!

Hello Guest! Login or Register to submit articles!

Deep Dive into Customer segmentation using Statistical / Analytical Techniques

By Sandeep Agarwal Subscribe to RSS | January 7th 2012 | Views:
loading
 
  



Today the business officials not only needs to design the strategies for retention of the customer base but also to increase the Customer base at a very fast pace. Earlier the number of players in a particular segment was very low which led to easy path for the players as most of them used to enjoy monopoly in the market. But as the level of competition is very high in the present scenario, it takes significantly lesser effort for the competitors to uproot the company. In order to sustain the business, the official continuously looks for expansion of the customer base. But to incur the expansion is not a cakewalk; it requires significant study as in which segment to target and many other issues. As companies need to incur significant expenditure in the expansion process, the officials are very much answerable to the CEO about the cost and benefit aspects of the same.

Here we would like to state few of the analytical techniques which are extensively used in the study of existing customer base to get significant insights on which segment of customer to target for maximum return. Mostly people uses analytic technique like cluster analysis in this scenario but here we would like to look at other analytical techniques such as Probit to get an idea about the existing customer base. The basic idea behind applying this statistical technique is to get an idea about the probability that a particular customer will purchase the product based on some known independent parameters or variables. This technique is more robust as compared to cluster analysis because it gives better insights about the customer and deep dive into the primary question as in how probable a particular type of customer to purchase a particular product.

Let us explain a bit about the analytical technique we are arguing about in the entire discussion. Firstly let us talk about the data which is there when we use this technique and why can’t we use the normal regression techniques in this scenario. Firstly the dependent variable in this case is either one or zero according to whether the customer purchased a product or not respectively. In this scenario you can’t use statistical technique such as linear regression as it violates an assumption that the dependent variable should be continuous in nature. So we need to divert ourselves into other estimation techniques such as maximum likelihood estimator. We would also need to take into account all the information about independent variables. After running the probit model you will get a value of probability depending upon the values of independent variables such as age, sex, income and many more. This will help you to segment the customers into high, moderate and low purchasing probability segments. Now depend on the threshold value of probability depending upon your personal discretion and business sense you can target a particular set of customers.

To run the probit model we can use any statistical software such as SAS and SPSS but SAS would be better as the size of data will be huge. This particular statistical technique is extensively used in the analytics industry to completely understand the behaviour of customers. It help to properly target your advertising as post this analysis you can do promotional activities like offers, discounts to attract that particular segment of customers.

Probit is different from cluster analysis as in cluster analysis you don’t have information about dependent variable and you directly work out on independent variables to segment the customers or anything else.

Sandeep Agarwal - About Author:
Meltdata Business Solutions is a result oriented, technology-driven full service Market Research and Marketing Solutions provider. Our specialized range of services comprise of extensive end-to-end data collection services, data processing, data analysis and reporting services.

Share on Facebook Tweet It Stumbleupon this post This post is delicious !

Article Source:
http://www.articleside.com/marketing-articles/deep-dive-into-customer-segmentation-using-statistical-analytical-techniques.htm

Related Marketing Articles Subscribe to RSS

Cloud computing services in Denver by Micro tech tel
Published by Roger White on April 9th 2012 | Business
When you are looking for the managed IT Services MicroTech Tel is the place to look out for the trus...
 
Do you need Event Staffing services to help with a large scale event?
Published by Mary Porter on June 18th 2012 | Business
Anyone who has ever put on a large event, celebration, product launch or gathering will know that ha...
 
Insight information on web development services
Published by Maya Gupta on June 12th 2012 | Business
In today’s modern world, it is extremely important to boast to online presence along with high ran...
 
Various kind of funeral services
Published by Canberra Marketing on December 3rd 2011 | Business
Here are some funeral program ideas for the memorial service of your beloved one. Arranging funeral ...
 
Copywriting services can boost your bottom line
Published by Freelancewriter on June 4th 2012 | Marketing
Brian Birnbaum is a web content writer offering copywriting services to companies in different indu...
 
A1 Acetate is just one of the printing services that Ezeeplan can offer
Published by James Blee on June 17th 2012 | Business
Our most popular service is to translate content from smaller scales to A1 acetate or paper sizes. H...
 
Medical coding services for surgeons and surgery centers
Published by Outsource Strategies International on March 21st 2012 | Business
With efficient medical coding services, surgeons and surgery centers can enjoy cleaner claims, fewer...
 
The services provided by a Skills Development Facilitator
Published by James Blee on July 16th 2012 | Business
A skills development facilitator will offer SETA training for people of all ages and all abilities. ...
 
A guide to Sky Talk and BT Line Rental services
Published by Paul Rowley on January 24th 2012 | Business
This article explains everything that you need to know about Sky Talk and BT Line rental services to...
 
Dental insurance billing services help maximize revenue
Published by Outsource Strategies International on February 3rd 2012 | Business
Dental insurance billing can help dental practices streamline their revenue cycle. Proper dental ins...
 
About ATM services and ATM machines
Published by Chris Adam on March 13th 2012 | Business
ATM machines serve a very important role for a complete experience in banking. They provide excellen...
 
Swimming Pool Builders: - Premium Pools provide the best pool services in INDIA.
Published by Pinky Sharma on June 5th 2012 | Business
I come from a lower middle class family in Lucknow that, no matter its conditions, placed huge empha...
 
Are you looking for T Shirt Printing services?
Published by Julia Roger on December 27th 2011 | Business
Here at Advertees we specialise in t shirt printing and we always use the very best materials availa...
 
The Buzzword in IT outsourcing: Staff Augmentation services
Published by Webmaster on February 5th 2012 | Business
With a population as large as India and dedicated to achieving excellence in the field of cutting ed...
 
The automobile services offered with good gear supplies.
Published by Mayank Gandhi on June 26th 2012 | Business
The Automobile Gear Suppliers are in plenty and to choose the best from them is further a bit tough ...
 
San Diego Google places optimization services
Published by Julia Bennet on April 24th 2012 | Business
When you are looking for the solution in order to get on top, the San Diego Google places optimizati...
 
Understanding the services of RV storage Corona CA
Published by Rabbecaanderson on April 22nd 2012 | Business
Some storage you can't access without a card issued. This is as good as long as employees in the org...
 
Are you interested in Stress Management services to aid your staff?
Published by James Blee on June 18th 2012 | Business
Office managers and other members of senior management at any firm will agree that having a stressed...
 
Try services of best San Diego acupuncturist
Published by Ashish Pandey on April 14th 2012 | Business
San Diego acupuncturists are very famous for the positive reasons. You can try acupuncture San Diego...
 
Order fulfillment services - its advantages and benefits
Published by Ema Sis on August 23rd 2012 | Business
Fulfillment also known as order fulfillment or else products fulfillment will be it whereby a person...