Content: Unsupervised Learning

Project: Creating Customer Segments

About

In this project, we will analyze a dataset containing data on various customers’ annual spending amounts (reported in monetary units) of diverse product categories for internal structure. One goal of this project is to best describe the variation in the different types of customers that a wholesale distributor interacts with. Doing so would equip the distributor with insight into how to best structure their delivery service to meet the needs of each customer.

The dataset for this project can be found on the UCI Machine Learning Repository. For the purposes of this project, the features 'Channel' and 'Region' will be excluded in the analysis — with focus instead on the six product categories recorded for customers.

Install

This project requires Python 2.7 and the following Python libraries installed:

• NumPy
• Pandas
• matplotlib
• scikit-learn

You will also need to have software installed to run and execute a Jupyter Notebook

If you do not have Python installed yet, it is highly recommended that you install the Anaconda distribution of Python, which already has the above packages and more included. Make sure that you select the Python 2.7 installer and not the Python 3.x installer.

Code

Template code is provided in the customer_segments.ipynb notebook file. You will also be required to use the included visuals.py Python file and the customers.csv dataset file to complete your work. While some code has already been implemented to get you started, you will need to implement additional functionality when requested to successfully complete the project. Note that the code included in visuals.py is meant to be used out-of-the-box and not intended for students to manipulate. If you are interested in how the visualizations are created in the notebook, please feel free to explore this Python file.

Run

In a terminal or command window, navigate to the top-level project directory customer_segments/ (that contains this README) and run one of the following commands:

ipython notebook customer_segments.ipynb

or

jupyter notebook customer_segments.ipynb

This will open the Jupyter Notebook software and project file in your browser.

Data

The customer segments data is included as a selection of 440 data points collected on data found from clients of a wholesale distributor in Lisbon, Portugal. More information can be found on the UCI Machine Learning Repository.

Note (m.u.) is shorthand for monetary units.

Features

1. Fresh: annual spending (m.u.) on fresh products (Continuous);
2. Milk: annual spending (m.u.) on milk products (Continuous);
3. Grocery: annual spending (m.u.) on grocery products (Continuous);
4. Frozen: annual spending (m.u.) on frozen products (Continuous);
5. Detergents_Paper: annual spending (m.u.) on detergents and paper products (Continuous);
6. Delicatessen: annual spending (m.u.) on and delicatessen products (Continuous);
7. Channel: {Hotel/Restaurant/Cafe - 1, Retail - 2} (Nominal)
8. Region: {Lisbon - 1, Oporto - 2, or Other - 3} (Nominal)