Segment optimization

Date of publication: October 10, 2004

Abstract:

A cornerstone of marketing theory is that segmentation can play a crucial role in any marketing strategy. The purpose of this paper is to offer an approach that integrates the subjective and objective aspects of segmenting markets to enable the marketer and analyst to estimate an 'optimal' number of segments. We accomplish this by employing statistical indicators within and between segment solutions and using managerial judgment to interpret the results and select a solution. A case study with a consumer durable product yielding an optimal solution of four segments illustrates the approach.

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