How Collinearity Affects Mixture Regression Results

Marketing Letters, 2014, Forthcoming

Posted: 25 Jul 2014

See all articles by Jan-Michael Becker

Jan-Michael Becker

University of Cologne - Department of Marketing and Brand Management

Christian M. Ringle

Hamburg University of Technology (TUHH)

Marko Sarstedt

Otto-von-Guericke-Universität Magdeburg; Otto-von-Guericke-Universität Magdeburg; University of Newcastle (Australia)

Franziska Völckner

University of Cologne - Faculty of Management, Economics and Social Sciences

Date Written: 2014

Abstract

Mixture regression models are an important method for uncovering unobserved heterogeneity. A fundamental challenge in their application relates to the identification of the appropriate number of segments to retain from the data. Prior research has provided several simulation studies that compare the performance of different segment retention criteria. Although collinearity between the predictor variables is a common phenomenon in regression models, its effect on the performance of these criteria has not been analyzed thus far. We address this gap in research by examining the performance of segment retention criteria in mixture regression models characterized by systematically increased collinearity levels. The results have fundamental implications and provide guidance for using mixture regression models in empirical (marketing) studies.

Keywords: Market segmentation, Segment retention, Mixture regression, Collinearity

JEL Classification: A00

Suggested Citation

Becker, Jan-Michael and Ringle, Christian M. and Sarstedt, Marko and Völckner, Franziska, How Collinearity Affects Mixture Regression Results (2014). Marketing Letters, 2014, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2428783

Jan-Michael Becker

University of Cologne - Department of Marketing and Brand Management ( email )

Albertus-Magnus-Platz 1
Cologne, 50931
Germany

Christian M. Ringle (Contact Author)

Hamburg University of Technology (TUHH) ( email )

Am Schwarzenberg-Campus 4
Hamburg, 21073
Germany

HOME PAGE: http://www.tuhh.de/hrmo

Marko Sarstedt

Otto-von-Guericke-Universität Magdeburg ( email )

Universitätspl. 2
PSF 4120
Magdeburg, D-39106
Germany

Otto-von-Guericke-Universität Magdeburg ( email )

Universitätspl. 2
PSF 4120
Magdeburg, D-39106
Germany

University of Newcastle (Australia) ( email )

University Drive
Callaghan, NSW 2308
Australia

Franziska Völckner

University of Cologne - Faculty of Management, Economics and Social Sciences ( email )

Richard-Strauss-Str. 2
Cologne, D-50923
Germany

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