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Recent Advances in Modularity Optimization and Their Application in Retailing

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Abstract

In this contribution we report on three recent advances in modularity optimization, namely: 1. The randomized greedy (RG) family of modularity optimization al- gorithms are state-of-the-art graph clustering algorithms which are near optimal, fast, and scalable. 2. The extension of the RG family to multi-level clustering. 3. A new entropy based cluster index which allows the detection of the proper clustering levels and of stable core clusters at each level. Last, but not least, several marketing applications of these algorithms for customer enablement and empowerment are discussed: e.g. the detec- tion of low-level cluster structures from retail purchase data, the analy- sis of the co-usage structure of scientific documents for detecting multi- level category structures for scientific libraries, and the analysis of social groups from the friend relation of social network sites.

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