Using graphical statistics to better understand market segmentation solutions

Sara Dolnicar

University of Queensland

Friedrich Leisch

University of Natural Resources and Life Sciences

Introduction

Market segmentation means ‘grouping potential customers into sets that are homogeneous in response to some elements of the marketing mix’ (Choffrey & Lilien 1980). Smith introduced the concept in 1956, and Haley (1968) later extended segmentation bases to include psychographic elements such as purchase motives and benefits sought. Market segmentation is an extremely popular and commonly used tool in strategic marketing. Not only do organisations focus their marketing activities on target segments that have emerged from segmentation studies, academics also use market segmentation frequently to develop knowledge: according to Zins (2008), for example, about 5% of all tourism publications are segmentation studies.