How can entrepreneurs improve digital market segmentation? A comparative analysis of supervised and unsupervised learning algorithms

Abstract

The identification of digital market segments to make value-creating propositions is a major challenge for entrepreneurs and marketing managers. New technologies and the Internet have made it possible to collect huge volumes of data that are difficult to analyse using traditional techniques. The purpose of this research is to address this challenge by proposing the use of AI algorithms to cluster customers. Specifically, the proposal is to compare the suitability of supervised algorithms, XGBoost, versus unsupervised algorithms, K-means, for segmenting the digital market. To do so, both algorithms have been applied to a sample of 5 million Spanish users captured between 2010 and 2022 by a lead generation start-up. The results show that supervised learning with this type of data is more useful for segmenting markets than unsupervised learning, as it provides solutions that are better suited to entrepreneurs’ commercial objectives.

The GenAI is out of the bottle: generative artificial intelligence from a business model innovation perspective

“…Second, it contributes to the growing discussion at the interface of digital technologies and BMI (e.g., Ancillai et al 2023;Aström et al 2022;Jorzik et al 2023). Third, it extends the discussion of artificial intelligence and analytics in management context (e.g., Korherr et al 2022;Korherr and Kanbach 2023;Sáez-Ortuño et al 2023).…”

Application of Artificial Intelligence in Neuromarketing to Predict Consumer Behaviour Towards Brand Stimuli

“…In the digital age, online presence, social media, and online reviews play a significant role in purchasing decisions, as consumers seek information online before making purchases and rely on feedback from other users (Hakami & Mahmoud, 2022). The quality of the customer experience, ranging from website navigation to interaction with customer service, may have a significant impact on consumers' loyalty and their willingness to recommend a brand (Sáez-Ortuño et al, 2023). Furthermore, consumers are increasingly making purchasing decisions based on ethical and sustainability considerations (Ogiemwonyi & Jan, 2023;Pradeep & Pradeep, 2023), forcing companies to adopt responsible business practices to gain preference among consumers conscious of these issues (Romero Valenzuela & Camarena Gómez, 2023).…”