Multicriterion Market Segmentation: A New Model, Implementation, and Evaluation

Ying Liu (), Sudha Ram (), Robert F. Lusch () and Michael Brusco ()
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Ying Liu: College of Business Administration, California State University, Long Beach, Long Beach, California 90840
Sudha Ram: Eller College of Management, University of Arizona, Tucson, Arizona 85721
Robert F. Lusch: Eller College of Management, University of Arizona, Tucson, Arizona 85721
Michael Brusco: College of Business, Florida State University, Tallahassee, Florida 32306

Marketing Science, 2010, vol. 29, issue 5, 880-894

Abstract: Market segmentation is inherently a multicriterion problem even though it has often been modeled as a single-criterion problem in the traditional marketing literature and in practice. This paper discusses the multicriterion nature of market segmentation and develops a new mathematical model that addresses this issue. A new method for market segmentation based on multiobjective evolutionary algorithms, called MMSEA, is developed. It complements existing segmentation methods by optimizing multiple objectives simultaneously, searching for globally optimal solutions, and approximating a set of Pareto-optimal solutions. We have applied and evaluated this method in two empirical studies for two firms from distinct industries: descriptive segmentation of the cell phone service market from a dual-value creation perspective and predictive segmentation of retail customers based on profit and customer sociodemographic attributes. The results provide decision makers with compelling alternatives and enhanced flexibility currently missing in existing market segmentation methods.

Keywords: multicriterion market segmentation; descriptive market segmentation; predictive market segmentation; multiobjective evolutionary algorithms; multiobjective optimization; multiobjective clustering; Pareto-optimal solution set (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormksc:v:29:y:2010:i:5:p:880-894

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