Data Warehousing & Data Mining

Assignment $7$

Submission guidelines:

$$ Use Data file titled $$EastWestAirlinesCluster$.$jmp$$

$$ You have to complete this assignment using JMP Pro. Please submit your solution in a word

document and add screenshots of your JMP output where necessary.

Case Study: Marketing to Frequent Fliers.

The file EastWestAirlinesCluster.jmp contains information on $3999$ passengers who belong to an airline's

frequent flier program. For each passenger the data include information on their mileage history and on

different ways they accrued or spent miles in the last year. The goal is to try to identify clusters of

passengers that have similar characteristics for the purpose of targeting different segments for different

types of mileage offers.

$1.$ Apply hierarchical clustering and Ward's method. Make sure to standardize the data. Use the

dendrogram and the scree plot, along with practical considerations, to identify the $$best$$ number

of clusters. Use the Color Clusters and Two$-$Way Clustering option to help interpret the clusters.

How many clusters would you select? Why?

$2.$ What would happen if the data were not standardized?

$3.$ Explore the clusters to try to characterize them. Try to give each cluster a label.

a$.$ Compare the cluster centroids $($select Cluster Summary$),$ and click on the lines to

characterize the different clusters.

b$.$ Save the clusters to the data table and use graphical tools and the Column Switcher.

$4.$ To check the stability of the clusters, hide and exclude a random $5\%$ of the data $($use Rows $>$ Row

Selection $>$ Select Randomly, and then use Rows $>$ Hide and Exclude$),$ and repeat the analysis.

Does the same picture emerge?

$5.$ Use k$-$means clustering with the number of clusters that you found above. How do these results

compare to the results from hierarchical clustering? Use the built$-$in graphical tools to characterize

the clusters.

$6.$ Which clusters would you target for offers, and what types of offers would you target to

customers in that cluster?