Question
A data analysis team needs to segment customers based on customer spending behavior. The team has one million rows of data like the information in the following sales order table:
| Customer_ID | Region | Amount_spent | Product_category | Quantity_of_items |
|---|---|---|---|---|
| 00123 | East | 200000 | Baby | 4 |
| 00124 | West | 300000 | Home | 6 |
| 00125 | South | 400000 | Garden | 7 |
| 00126 | North | 500000 | Furniture | 8 |
| 00127 | East | 600000 | Baby | 10 |
Which of the following techniques should the team use for this task?
- A. Standardization
- B. Concatenate
- C. Binning Correct
- D. Appending
Explanation
Binning groups a continuous numeric variable such as Amount_spent into ranges (for example low, medium and high spenders), which directly produces customer segments by spending behavior. Standardization rescales values but does not group them, while concatenating and appending combine fields or data sets rather than segmenting records.
