IngentaConnect Supermarket customers segments stability

Authors: Fonseca, Jaime R S; Cardoso, Margarida G M S

Source: Journal of Targeting, Measurement and Analysis for Marketing, Volume 15, Number 4, September 2007 , pp. 210-221(12)

Publisher: Palgrave Macmillan

Abstract:

Stability is a desirable property of a segment structure that has implications in its managerial utility, particularly in what concerns targeting and positioning. The stability of a segment structure is the focus of the present work. We argue that the evaluation of stability should be preceded by an adequate segmentation methodological approach that addresses satisfactorily the issues of selection of segmentation base variables, modelling and determination of an adequate number of segments. We advocate the use of the latent segments model approach (estimation of finite mixtures) and the selection of the best models to be based on the ICL-BIC, CAIC, BIC and L information criteria, which evidence some advantages when dealing with mixed-type variables, commonly used in segmentation. We then address the evaluation of stability. Internal stability is evaluated using split samples procedures and replicating segmentation results. Dynamic stability evaluation relies on analysis of data related to different time periods. An application concerning the segmentation of customers of a supermarket chain illustrates the proposed approach. Two databases related to questionnaires conducted in 2000 and 2003 (with 3,141 and 1,504 observations, respectively) are used. The obtained two-segment structure —Preferential Customers and Occasional Customers— exhibits internal and dynamic nonstability.Journal of Targeting, Measurement and Analysis for Marketing (2007) 15, 210-221. doi:10.1057/palgrave.jt.5750052

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