A survey of the challenges and pitfalls of cluster analysis application in market segmentation

Michael N. Tuma, Reinhold Decker and Sören W. Scholz

Market segmentation is a widely accepted concept in marketing research and planning. Although cluster analysis has been extensively applied to segment markets in the last 50 years, the ways in which the results were obtained have often been reported to be less than satisfactory by both practitioners (Yankelovich & Meer 2006) and academics (Dolnicar 2003).

A survey of the challenges and pitfalls of cluster analysis application in market segmentation

Michael N. Tuma, Reinhold Decker and Sören W. Scholz

Bielefeld University

Introduction

Many people believe that market segmentation is the key strategic concept in marketing today. It has been understood as the attempt to distinguish ‘homogeneous groups of customers who can be targeted in the same manner because they have similar needs and preferences’ (Wedel & Kamakura 2002, p. 181). A good segmentation solution will result in segment members that are as similar as possible within the segment, and as dissimilar as...

WARC subscribers can sign in to keep reading

Not a subscriber?

Schedule your live demo with our team today

WARC helps you to plan, create and deliver more effective marketing

  • Prove your case and back-up your idea

  • Get expert guidance on strategic challenges

  • Tackle current and emerging marketing themes

We’re long-term subscribers to WARC and it’s a tool we use extensively. We use it to source case studies and best practice for the purposes of internal training, as well as for putting persuasive cases to clients. In compiling a recent case for long-term, sustained investment in brand, we were able to support key marketing principles with numerous case studies sourced from WARC. It helped bring what could have been a relatively dry deck to life with recognisable brand successes from across a broad number of categories. It’s incredibly efficient to have such a wealth of insight in one place.

Insights Team
Bray Leino

You’re in good company

We work with 80% of Forbes' most valuable brands* and 80% of the world's top top-of-the-class agencies.

* Top 10 brands