Judging the quality of customer segments: segmentation effectiveness

Abstract

Market segmentation is well established in marketing theory and applied by organizations from all industry sectors. Despite wide-spread use, developing and implementing segmentation schemes is rarely problem free. Testing the quality and robustness of segments is one of the difficulties which marketers face. The literature describes segment quality criteria which are intended to help with this task, yet there is little evidence of their deployment and efficacy in practice. Using a longitudinal case study from the Eastern European mobile phone market, the practical application, impact and efficacy of these segment quality criteria are examined. The findings reveal the value of combining 'hard' statistical and 'soft' segment quality criteria to test the validity and robustness of segmentation outputs prior to implementing the segmentation. Implications from this case for managers seeking to select and deploy suitable quality criteria are considered.

A New Market Segmentation Approach: Evidence from Two Canadian Cities

“…As the method used is an exploratory form of cluster analysis, it was important to set criteria to determine how many clusters to retain. Although there are many approaches to judging the quality of segments (Dibb and Simkin 2010), because this analysis aims to update Krizek and El-Geneidy's (2007) Transit Segmentation Model, we used the transit-specific criteria set by these authors to guide our decision:…”

Unsupervised Learning Framework for Customer Requisition and Behavioral Pattern Classification

“…Profiling techniques provide marketers with superior tools for customer segmentation and market adaptation strategies aimed at studying the specific needs of each consumer (McDonalds and Dunbar, 2004). Criteria relating to geographical, demographical, psycho-graphical, socio-economic, behavioral characteristics and psychological attitudes toward the respective product or service are mostly explored (Dibb and Simkin, 2010). However, the most commonly used characteristic is demographics, but demographics may not be sufficient to segment or cluster highly competitive markets.…”

International Market Segmentation: Exploring Cell Phone Market of Young Adults

“…Dibb and Simkin (2010) [23] is the first robust multi-country study aimed to test the quality of segmentation using a longitudinal case study of the Eastern European market. However, even though for this research data was from multiple countries, it is difficult to establish whether true international segments exist.…”