Using cluster analysis and DEA-discriminant analysis to predict group membership of new customers

Reza Farzipoor Saen*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

15 Citations (Scopus)

Abstract

To understand the value of customers and target the most profitable customers, this paper uses cluster analysis to classify customers into four groups as platinum, gold, iron, and lead. Then, to predict group membership of new customers, data envelopment analysis-discriminant analysis (DEA-DA) model is applied. This paper operationalises the concept proposed by Zeithaml et al. (2001), ('The customer pyramid: creating and serving profitable customers', California Management Review, Vol. 43, No. 4, pp.118-142) on forming the customer pyramid. A case study demonstrates the application of the proposed approach.

Original languageEnglish
Pages (from-to)348-360
Number of pages13
JournalInternational Journal of Business Excellence
Volume6
Issue number3
DOIs
Publication statusPublished - Jan 1 2013

Keywords

  • Cluster analysis
  • Customer pyramid
  • DA
  • Data envelopment analysis
  • Data envelopment analysis-discriminant analysis
  • DEA
  • DEA-DA
  • Discriminant analysis

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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