UNIVERSITY PARK, PA-Rather than use "one size fits all" marketing, many companies try to increase their precision marketing through segmentation. Marketers typically target a large identifiable group within a market with similar wants, purchasing power, geographical location, buying attitudes, or buying habits.
"Market segmentation is one of the most endemic procedures in marketing today. It involves partitioning one's market place into market segments, and targeting a subset of these segments to market where you have a competitive advantage. However, the way the vast majority of companies are doing market segmentation today is totally inadequate," says Wayne S. DeSarbo, The Smeal Distinguished Research Professor ofMarketing in Penn State's Smeal College of Business. DeSarbo has co-authored some recent research that shows that the current approaches used by practitioners for market segmentation (including cluster analysis, CHAID, CART, discriminant analysis, latent class analysis, and Bayesian approaches) are grossly inadequate in solving the problems and needs of business.
Proper market segmentation schemes, DeSarbo explains, should address not only how to develop schemes of homogeneous market segments within designated managerial, institutional, and environmental restrictions, but also how to construct such schemes that satisfy criteria for quality market segmentation."The vast majority of current existing methodological approaches to market segmentation fail dramatically in appropriately dealing with such issues," says DeSarbo.
The research, "A Generalized Normative Methodology Employing Conjoint Analysis," develops objective criteria for evaluating market segmentation approaches. DeSarbo also shows that his new proposed methodology is shown to be much superior. The study appears as a chapter in the forthcoming book, "Conjoint Analysis."
DeSarbo has published over 100 articles in such journals as the Journal of Marketing Research, Psychometrika, Journal of Consumer Research, and the Journal of Mathematical Psychology. He was awarded the 1988 Raymond B. Cattell Award for his outstanding research contributions in mathematical psychology and nominated as President of the Psychometric Society. In addition, DeSarbo was awarded the University of Michigan Senior Research award for his research performance at the School of Business. He was one of a few prominent Marketing scholars to be selected by the Royal Swedish Academy to serve on the Nobel Prize Nomination Committee. He was the Chair of the Statistics in Marketing Section of the American Statistical Society.
DeSarbo serves on the review boards of Marketing Science, the Journal of Consumer Research, and the Journal of Marketing Research. He has ten years of work experience in marketing research at AT&T and Bell Laboratories; and has been a consultant for such diverse firms as AMERITECH, AT&T, Ad Audit, Pfizer Drug, SENMED, Pacific Bell, Ethicon, General Motors, Hughes Aircraft, GTE, Motorola, Marketing Metrics, Blue Cross, Eli Lilly Co., and Merck Pharmaceuticals. He is CEO and owner of ANALYTIKA Marketing Sciences, Inc.
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Editors: Wayne DeSarbo is at 814-364-2568 or e-mail at [email protected]. For a copy of the paper, contact Steve Infanti in the Smeal College Media Relations Office at 814-863-3798 or [email protected].
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