Two-tiered Clustering Classification Experiments for Market Segmentation of EFTPOS Retailers

Abstract

This paper proposes the application of clustering and classification techniques on finding groupings of retailers who use the Electronic Funds Transfer at Point Of Sale (EFTPOS) facilities of a major bank in Australia. The RFM (Recency, Frequency, Monetary) analysis on each retailer is used to reduce the large data set of customer purchases through the EFTPOS network for the purpose of the retailer clustering. We then incorporate attributes of the EFTPOS transaction data in addition to the derived RFM attributes to build a decision tree to facilitate the extraction of business rules that explain the characteristics of the retailer clusters.