COMBINATORIAL OPTIMIZATION APPROACHES TO NORMATIVE MARKET SEGMENTATION: AN APPLICATION TO INDUSTRIAL MARKET SEGMENTATION

Author:

Wayne S. DeSarbo, Smeal Distinguished Research Professor of Marketing, Pennsylvania State University; President, Analytika Marketing Science, Inc.
Douglas Grisaffe, Vice President of Research Sciences, Walker Information

ISBM Report 184996

ABSRACT:

Normative market segmentation addresses not only how to develop feasible schemes of homogeneous  arket segments within designated managerial, institutional, and environmental restrictions, but also how to  onstruct such schemes simultaneously in conjunction with associated resource constraints. Current  existing  methodological approaches to market segmentation fall short of such development issues. This manuscript proposes an alternative approach for the construction of market segments particular to the needs and constraints for a particular application (NORMCLUS). We employ some recent developments in ombinatorial optimization algorithms and heuristics in forming managerially relevant market segments. We llustrate this methodology in the context of an actual industrial marketing application concerning the differential drivers of customer perceived overall quality.

The Origin: http://www.smeal.psu.edu/isbm/database/documents/wp96/18-1996.pdf

Full Text: Market Segmentation

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