SCALES OF MEASUREMENT AND CLUSTER-ANALYSIS - AN APPLICATION CONCERNING MARKET SEGMENTS IN THE BABYFOOD MARKET

This paper describes the use of cluster analysis to determine market segments in the babyfood market in Britain. The cluster analysis uses data from a panel of consumers and is applied to buyer behaviour variables, the resulting segments being related to the demographic characteristics of the mothers. The scale of measurement used is the ratio scale, which is quite meaningful for this application. The paper shows how and why cluster analysis fails to reveal clusters, when they clearly exist when the variables are measured by using an ordinal and a nominal scale. It is argued that applied statisticians should examine whether meaningful ordinal and nominal scales are nested in (albeit meaningful) ratio scales, since analysis based on a ratio scale may obscure relationships which may exist in ordinal and nominal scales.