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Applications of cluster analysis to marketing problems are reviewed. Alternative methods of cluster analysis are presented and evaluated in terms of recent empirical work on their performance characteristics. A two-stage cluster analysis methodology is recommended: preliminary identification of clusters via Ward's minimum variance method or simple average linkage, followed by cluster refinement by an iterative partitioning procedure. Issues and problems related to the use and validation of cluster analytic methods are discussed.
Punj et al. (Sun,) studied this question.
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