A Fuzzy Clustering Approach for Segmenting Retail Industry

Abstract

The foremost theme of this chapter is to utilize the subtractive clustering concept for defining the market boundaries in the fuzzy-based segmentation. In this sense, the present work starts by analyzing the importance of segmenting the shoppers on the basis of store image. After reviewing the segmentation literature, the authors performed a segmentation analysis of retail shoppers in India. Researchers often use clustering analysis as a tool in market segmentation studies, the results of which often end with a crisp partitioning form, where one member cannot belong to two or more groups. This indicates that different segments overlap with one another. This chapter integrates the concept of application of subtractive clustering in fuzzy c means clustering for profiling the customers who perceive the retail store based on its image. Fuzzy clustering is also compared with hard clustering solutions. Then the authors predict the model using discriminate analysis. Further, the chapter concentrates on the answer tree model of segmentation to identify the best predictor. Main conclusions with implications for retailing management are shown.