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NEW MARKET SEGMENTATION METHODS USING ENHANCED (RFM), CLV, MODIFIED REGRESSION AND CLUSTERING METHODS

Authors: Fahed Yoseph;

NEW MARKET SEGMENTATION METHODS USING ENHANCED (RFM), CLV, MODIFIED REGRESSION AND CLUSTERING METHODS

Abstract

A widely used approach for gaining insight into the heterogeneity of consumer’s buying behavior is market segmentation. Conventional market segmentation models often ignore the fact that consumers’ behavior may evolve over time. Therefore retailers consume limited resources attempting to service unprofitable consumers. This study looks into the integration between enhanced Recency, Frequency, Monetary (RFM) scores and Consumer Lifetime Value (CLV) matrix for a medium size retailer in the State of Kuwait. A modified regression algorithm investigates the consumer purchase trend gaining knowledge from a pointof-sales data warehouse. In addition, this study applies enhanced normal distribution formula to remove outliers, followed by soft clustering Fuzzy C-Means and hard clustering Expectation Maximization (EM) algorithms to the analysis of consumer buying behavior. Using cluster quality assessment shows EM algorithm scales much better than Fuzzy C-Means algorithm with its ability to assign good initial points in the smaller dataset.

Keywords

Segmentation, Clustering

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This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
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popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
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