EXERCISE 3: PRACTICE THE SIX STEPS OF THE ANALYTICS OF STP

I recommend demonstrating this in class with students AND then having them try it on their own as individuals or in groups using different segmentation variables. This can be completed on Zoom or similar.

1. Open Chipotle.xlsx in Excel or Google Sheets. And open Chipotle Data Key.docx in Word or Google Docs.
2. Classify each variable in the Chipotle dataset as the following (or none):
   1. Demographic segmentation
   2. Psychographic segmentation
   3. Behavioral segmentation
   4. Outcome
   5. Business efforts
      1. Product
      2. Place
      3. Price
      4. Promotion
   6. Not to be used
3. Decide on a distinct number of clusters (3 or 4), discussing whether there is a business reason for this number of clusters.
4. Open Chipotle.xlsx to run a cluster analysis.
5. Segment the data using the K-means method. Choose whatever variables you think are best for segmentation: demographic, psychographic or behavioral variables. State which you chose and why.
6. Save cluster membership in the data. Do this once for each of the following:
7. Check to see the number of people assigned to each cluster.
8. Repeat Steps 57 until you have created clusters that you like (each of the clusters should have at least 20 people per cluster).
9. Investigate the clusters quantitatively using means (e.g., Cluster 1 the age mean was 34; it was 74 percent female and income was high at 3.4 on a four point scale).
10. Profile each cluster qualitatively based on the data from Step 8 (e.g., Cluster 1 is middle-age, wealthy cluster, etc.)
11. Investigate outcome variable means for each cluster. For example, show the past frequency of Chipotle patronage for each of the clustered segments.
12. Which cluster would you recommend as a primary target, and why?
13. Run means analyses for variables you classified as business effort variables above. What business efforts would you recommend (e.g., product, place, promotion and price strategy) for the primary target, in terms of your creative input? Also, present segmented bar charts (see example below).