What is ... Discriminate analysis?

It's a method of segmenting your entire customer base using a smaller customer sample that has already been segmented, for example, by a market survey (see Technique, page 25). Once a sample has been pre-assigned into groups, you can use discriminate analysis to apply these groups across your entire customer base.

Using numerical customer data (for example, transactional data), it calculates for each customer a probability score for membership of each group, and the customer is assigned to the group with the highest score.

You can measure how successful your analysis has been by checking in your test data to see how many records have been assigned to the right group.


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