ExpertEasy1 markMultiple Choice
CPA · Question 50 · Area 4: Data Analytics
A company is using 'Cluster Analysis' on its customer database. What is the primary business objective of this technique?
A company is using 'Cluster Analysis' on its customer database. What is the primary business objective of this technique?
Answer options:
A.
To predict future sales volume.
B.
To segment customers into groups with similar characteristics for targeted marketing.
C.
To identify fraudulent transactions.
D.
To determine the cause of customer churn.
How to approach this question
Cluster = Group. Why group customers? To treat them differently (Marketing).
Full Answer
B.To segment customers into groups with similar characteristics for targeted marketing.✓ Correct
B
Cluster analysis is an unsupervised learning technique used to group observations. In marketing, it is the primary tool for market segmentation.
Common mistakes
Confusing Clustering with Classification (Classification predicts a known label; Clustering finds the labels).
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