Implementing Managerial Constraints in Model Based Segmentation: Extensions of Kim, Fong, and DeSarbo (2012) with an Application to Heterogeneous Perceptions of Service Quality

Journal of Marketing Research, Forthcoming.

Georgetown McDonough School of Business Research Paper

63 Pages Posted: 9 Jun 2013

See all articles by Sunghoon Kim

Sunghoon Kim

Pennsylvania State University

Simon J. Blanchard

Georgetown University - Robert Emmett McDonough School of Business

Wayne S. DeSarbo

Pennsylvania State University

Duncan K. H. Fong

Pennsylvania State University

Date Written: May 14, 2013

Abstract

Kim, Fong, and DeSarbo (2012) recently introduced a finite mixture Bayesian regression model to simultaneously identify market segments of consumers (heterogeneity) and determine how such segments differ with respect to active regression coefficients (variable selection). The current manuscript introduces three extensions of their model to incorporate managerial restrictions (constraints). We demonstrate with synthetic data that the new constrained finite mixture Bayesian regression models can be gainfully employed to identify and represent several constrained heterogeneous response patterns commonly encountered in practice. In addition, we illustrate that the proposed models are more robust against multicollinearity than traditional methods. Finally, to illustrate their usefulness, we apply the proposed constrained models in the context of a service quality (SERVPERF) survey of the National Insurance Company’s customers.

Keywords: Bayesian Regression Models, Market Segmentation, Variable Selection, SERVQUAL, SERVPERF, Finite Mixture Models, Heterogeneity

Suggested Citation

Kim, Sunghoon and Blanchard, Simon J. and DeSarbo, Wayne S. and Fong, Duncan K. H., Implementing Managerial Constraints in Model Based Segmentation: Extensions of Kim, Fong, and DeSarbo (2012) with an Application to Heterogeneous Perceptions of Service Quality (May 14, 2013). Journal of Marketing Research, Forthcoming., Georgetown McDonough School of Business Research Paper, Available at SSRN: https://ssrn.com/abstract=2276041

Sunghoon Kim (Contact Author)

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Simon J. Blanchard

Georgetown University - Robert Emmett McDonough School of Business ( email )

3700 O Street, NW
Washington, DC 20057
United States

Wayne S. DeSarbo

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

Duncan K. H. Fong

Pennsylvania State University ( email )

308 armsby
university park, PA 16802
United States

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