Cluster-Based Market Segmentation: Some Further Comparisons of Alternative Approaches

Catherine M Schaffer and Paul E Green

Recently, Green & Krieger (1995) reported that the highly popular 'tandem approach' to market segmentation, based on a preliminary factor analysis followed by a clustering of rotated, standardised factor scores, does not perform as well as a straightforward clustering.
  

Cluster-Based Market Segmentation: Some Further Comparisons of Alternative Approaches

Catherine M. Schaffer andPaul E. GreenWharton School, University of Pennsylvania

Introduction

Since the early 1970s, cluster-based market segmentation (Green 1971; Wind 1978) has become increasingly popular in marketing. During the late 1970s and early 1980s, both hierarchical and non-hierarchical clustering techniques were used to segment consumers. During the late 1980s, however, non-hierarchical methods such as k-means became dominant for segmenting the large data sets typically encountered in marketing.

Probably the main departure from the straightforward clustering of the rows of consumers by a variables data matrix...

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