The use of the k-prototypes method in the segmentation of customers of a company in the Multi-Level Marketing Cover Image

Wykorzystanie algorytmu k-prototypów w segmentacji klientów przedsiębiorstwa w marketingu wielopoziomowym
The use of the k-prototypes method in the segmentation of customers of a company in the Multi-Level Marketing

Author(s): Łukasz Sroka
Subject(s): Socio-Economic Research
Published by: Główny Urząd Statystyczny
Keywords: segmentation; k-prototypes method; Multi-Level Marketing; MLM

Summary/Abstract: Segmentation of clients plays an important role in designing a company’s marketing strategy. Differentiating between groups of customers in terms of their characteristics and behaviours, and understanding how customer preferences and needs are shaped, is key to determining effective marketing tools. The aim of the paper is to present the potential of the k-prototypes method in the customer segmentation process. In the study, conducted according to the above-mentioned type of machine learning algorithm, clusters were extracted and the statistical analysis of the groups thus obtained was carried out, using sales data of a trading company operating in the Multi-Level Marketing (MLM) system for the period from September to October 2020. As a result, the company’s customers were divided into six segments, significantly different from each other in terms of features characteristic for clients of an MLM enterprise.The k-prototypes algorithm, adopted here as a segmentation method, satisfactorily processed both numerical and categorical data, and made it possible to identify the clusters. The results obtained by means of this method demonstrated that there are groups of clients of the examined company which focused on maximizing the benefits indicated in the marketing plan as the aim of the company’s operations, customers undecided as to whether to continue in the entity’s structure, and customers who did not plan to associate their future with the examined company.

  • Issue Year: 66/2021
  • Issue No: 07
  • Page Range: 44-56
  • Page Count: 13
  • Language: Polish