Customer segmentation with product interests

We have discussed how we can build customer segments based on their purchase history in the previous section and how this can inform marketers on which segment to prioritize and strategize for the next marketing effort. Not only can we segment customers based on their purchase history, or more specifically with numerical values, but we can also find customer segments based on their product interests.

The items that customers purchase have hidden insights into what types of items each customer is interested in and what they are likely to purchase more of. There are multiple approaches to segmenting customers based on the products that they have purchased in the past, such as simply grouping by the product categories that they have purchased from. However, in this exercise, we are going to expand on the topic of the embedding vectors that we touched on in Chapter 5.

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