An Explanation and Illustration of Cluster Analysis for Identifying Hospitality Market Segments

Hierarchical clustering methods are presented using a simplified example. The article describes and explains six steps in the cluster analysis process: variable selection, data management, selection of clustering methods, deriving cluster solutions, validating results, and interpreting results. The article concludes by giving the reader an example of how each of the steps was processed in the identification and description of three market segments based on entertainment preferences. The purpose of the article is to encourage increased usage of this valuable means of revealing market niches by researchers in the field of hospitality.