Chapter 9: Data Mining’s Usefulness for Assessing market Segmentation performance

Since its inception, the concept and techniques of market segmentation have been of prime interest to academic researchers. Practicing marketing managers embrace segmentation as a core component of successful marketing strategy. Despite this, a number of writers suggest that the actual implementation of segmentation by organizations has often led to disappointing results. One of the important reasons for this is an inadequate focus on post-implementation performance-monitoring activities. The present chapter addresses this gap and suggests that data-mining techniques can provide a timely and useful assessment of segmentation performance. It then describes an actual situation to demonstrate the effectiveness of data-mining methods in detecting the inadequacy of a pharmaceutical company’s attempt to segment the market for a prescription drug. The research also disclosed the superior performance of a hierarchical data-mining approach compared to conventional single-model methods.