Segmentation and Lifetime Value Models Using SAS

2Segmentation Models

Contents

2.1 Introduction to segmentation models

2.2 K-means clustering

2.3 A process for building segmentations

2.4 The finite mixture model

2.5 Chapter summary

     Segmentation is one of the central concepts in marketing because in almost all situations customers have different wants, needs, preferences, and so on. Marketers call this heterogeneity. Whenever such heterogeneity exists, organizations that recognize and accommodate differences can achieve an advantage over competitors in a category. Conversely, organizations that do not accommodate differences across customers and offer only one version of their marketing mix create opportunities for competitors. If customers are heterogeneous then it follows that not all ...