Using graphical statistics to better understand market segmentation solutions

Abstract

Market segmentation lies ‘at the heart of successful marketing’ (McDonald 2010), yet market segmentation solutions are not trivial to interpret, especially if consumers are segmented using post hoc or a posteriori or data-driven segmentation, where several consumer characteristics are analysed simultaneously to identify or construct market segments. In fact, 65% of marketing managers admit to having difficulties with the interpretation of data-driven market segmentation solutions. In this study we develop novel ways of visualising segmentation solutions using graphical statistics methodology. The proposed plots help academics and practitioners to interpret complex market segmentation solutions, thus improving the practical usability of market segmentation, reducing the risk of misinterpretation and contributing to closing the much-lamented ‘theory–practice divide’ in market segmentation.