Why does Segmentation Matter? Identify Market Segmments through a mixed methodology

Abstract

The purpose of this chapter has been to develop an overall framework that describes how market can be segmented, that is the objective of this study is the way of grouping customers together for the most effective targeting, by means of a new conceptual model which intends to combine the use of Latent Segment Models with a mixed research scheme (by merging qualitative and quantitative researching methodologies). A particular retail market segmentation solution is a function of both the market segmentation base variables and a specific segmentation procedure, providing a better understanding of market. The knowledge of segment structure is of high importance for marketing because of its managerial utility, particularly in what concerns targeting and positioning. Companies that identify underserved segments can then outperform the competition by developing uniquely appealing products and services. This research began with an overview on segmentation aspects and aims, and presents, under mixed research scheme, an application with Latent Segment Model (LSM) procedure for retail market segmentation, and information criteria AIC3 and AICu for model selection, in order to uncover the segment structure underlying to a dataset from a retail chain customers.