Customer Transaction Clustering with K-Prototype Algorithm Using Euclidean-Hamming Distance and Elbow Method

This study aims to cluster customer transactions in a Japanese food stall using the K-Prototype Algorithm with a combination of Euclidean-Hamming Distance and the Elbow method. Facing intense industry competition, this study seeks to understand customer purchasing behavior to increase loyalty and sales. From 9.721 initial entries, 9.705 cleaned and transformed records were analyzed. K-Prototype was chosen because of its ability to handle numeric features (Total Sales, Product Quantity) and categorical features (Payment Method, Order Type, Day Category and Time Category). The combination of Euclidean-Hamming distances was used for distance measurement. The optimal number of clusters was determined using the Elbow method, with the results recommending three clusters as the most optimal number. A Silhouette score of 0.6191 indicates a Good Structure clustering result, effectively identifying three distinct customer grouping: "Loyal Regulars" (49.5%), "Casual Shoppers" (42.3%), and "Premium Shoppers" (8.2%). Statistical validity was also tested using ANOVA and Chi-Square, the results showed significant differences between the clusters in numerical and categorical variables with a p-value <0.0001. The clusters are statistically valid in both numerical and categorical aspects. These insights provide an understanding of customer characteristics and reveal a strategically valuable cluster for targeted marketing.