Finding new customers is vital in every industry. The process for finding new customers begins by learning as much as possible from the existing customers. Understanding current customers allow organizations to identify groups of customers that have different product interests, different market participation, or different response to marketing efforts. With this, we will be able not only to serve better our customers, but also to improve the targeting of prospective customers. Market segmentation, the process of identifying customers’ groups, makes use of geographic, de- mographic, psychographic, and behavioral characteristics of customers. By understanding the dif- ferences between the different segments, organizations can make better strategic choices about opportunities, product definition, positioning, promotions, pricing, and target marketing.

XYZ Sports Company is a well-established fitness facility that has been serving the community for several years. To enhance its marketing strategies, improve customer engagement, and tailor its ser- vices, the company aims to develop a comprehensive customer segmentation strategy. This project will focus on dividing the customer base into distinct segments based on various characteristics and behaviors. This project will leverage the dataset provided by the company’s ERP system, which includes a wealth of customer-related data, collected between June 1st 2014 and October 31st 2019. The objective of the company is to create a data-driven strategy that will enable it to better understand its customers, deliver more personalized services, and optimize marketing efforts. To do this, we suggest you segment the customers using different perspectives and approaches, as well as combine and analyze the results. XYZ would like to understand the value and demographics of each customer segment, as well as gain insights into the different sports activities that customers prefer to participate in.

1. Explore the data and identify the variables that should be used to segment customers.
2. Identify customer segments
3. Justify the number of clusters you chose (taking in consideration the business use as well).
4. Explain the clusters found.
5. Suggest business applications for the findings and define general marketing approaches for each cluster. Note: Invest time into evaluating your preprocessing pipeline, thinking how you want to do your clustering, possible approaches, and advantages or disadvantages of different decisions.