Modelling customer preference heterogeneity to iPad attributes using a finite mixture procedure

Abstract

The identification of segments in strategic market planning has long been recognized as a powerful tool to understand consumer behaviour. An approach that has managerial appeal in addressing market heterogeneity is by assuming that customers can be grouped in a number of unobserved homogeneous segments where customers in each cluster have similar purchasing behaviours. This paper describes the different procedures in affecting market segmentation focusing more on the Finite Mixture approach, while the application addresses heterogeneity issues in customer preferences when purchasing iPads given demographic and product-related predictors.