Cluster Analysis as a Decision-Making Tool: A Methodological Review

Cluster analysis has long played an important role in a broad variety of areas, such as psychology, biology, computer sciences. It has established as a precious tool for marketing and business areas, thanks to its capability to help in decision-making processes. Traditionally, clustering approaches concentrate on purely numerical or categorical data only. An important area of cluster analysis deals with mixed data, composed by both numerical and categorical attributes. Clustering mixed data is not simple, because there is a strong gap between the similarity metrics for these two kind of data. In this review we provide some technical details about the kind of distances that could be used with mixed-data types. Finally, we emphasize as in most applications of cluster analysis practitioners focus either on numeric or categorical variables, lessening the effectiveness of the method as a tool of decision-making.

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