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What is CHAID segmentation?

What is CHAID segmentation?

CHAID (Chi-Square Automatic Interaction Detector) analysis is a marketing segmentation technique. It is useful for identifying the relationships between categorical response variables. CHAID looks at how they might respond to a marketing campaign. It analyzes according to the attributes of each group.

What is a CHAID model?

Chi-square Automatic Interaction Detector (CHAID) was a technique created by Gordon V. Kass in 1980. CHAID is a tool used to discover the relationship between variables. CHAID analysis builds a predictive medel, or tree, to help determine how variables best merge to explain the outcome in the given dependent variable.

What is a cart model?

A Classification And Regression Tree (CART), is a predictive model, which explains how an outcome variable’s values can be predicted based on other values. A CART output is a decision tree where each fork is a split in a predictor variable and each end node contains a prediction for the outcome variable.

Is CHAID a machine learning?

CART and CHAID are both Decision Tree machine learning algorithms. Most decision tree algorithms differ with respect to how they determine the most important predictors, and the key values on which to split the dataset.

What is CART model used for?

The CART model is used to find out the relationship among defective transactions and “amount,” “channel,” “service type,” “customer category” and “department involved.” After building the model, the Cp value is checked across the levels of tree to find out the optimum level at which the relative error is minimum.

How does CHAID compare to other market segmentation methods?

However, as a market segmentation method, CHAID (Chi-square Automatic Interaction Detection) is more sophisticated than other multivariate analysis.

What is CHAID in database marketing?

Today in database marketing, CHAID primarily serves as a market segmentation technique. The Response Tree, above, represents a market segmentation of the population under consideration. The (five) bottom branch “boxes” called nodes, namely, the segments, represent the resultant market segmentation.

How does CHAID split the sample by predictor categories?

The first predictor category that CHAID uses to split the sample is the predictor that is associated the most with the response variable (highly satisfied customer or not), i.e., it gives the most differentiating groups of respondents.

What does CHAID stand for?

Chi-square automatic interaction detection (CHAID) is a decision tree technique, based on –; Magidson, Jay; The CHAID approach to segmentation modeling: chi-squared automatic interaction detection, in Bagozzi, Richard P. (ed );.

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