What is clustering?

…Before I dive into the mechanics of implementing cluster analysis in an Excel…workbook, I wanted to give you a quick overview of what clustering is.…The answer to the question, what…is clustering, has several different components.…The fist is the broad view.…And that is that clustering is a technique to…find groups of data points that appear to be related.…So for example, if you have sales data, then you might see a…correlation between the state where someone…lives and the amount of their orders.…Next, is clustering is a multi-step process.…

You don't just look at your data, run one formula, and identify your clusters.…Instead, it's an iterative process.…The first thing you do is define a number…of random centroids, or middle points, to start your analysis.…A centroid represents a group, and the idea is to reposition the…centroids so that you identify the groups that tend to cluster together.…That process consists of determining each point's closest centroid.…Then, after that analyses has been done for every…