Extending Dynamic Segmentation with Lead Generation: A Latent Class Markov Analysis of Financial Product Portfolios

CentER Discussion Paper No. 2004-01

46 Pages Posted: 17 Jun 2004

See all articles by Leo Paas

Leo Paas

Massey University - School of Communication, Journalism and Marketing

Tammo H.A. Bijmolt

University of Groningen - Department of Marketing & Marketing Research

J. Vermunt

Tilburg University - Department of Methodology and Statistics

Date Written: January 2004

Abstract

A recent development in marketing research concerns the incorporation of dynamics in consumer segmentation. This paper extends the latent class Markov model, a suitable technique for conducting dynamic segmentation, in order to facilitate lead generation. We demonstrate the application of the latent Markov model for these purposes using a database containing information on the ownership of twelve financial products and demographics for explaining (changes in) consumer product portfolios. Data were collected in four bi-yearly measurement waves in which a total of 7676 households participated. The proposed latent class Markov model defines dynamic segments on the basis of consumer product portfolios and shows the relationship between the dynamic segments and demographics. The paper demonstrates that the dynamic segmentation resulting from the latent class Markov model is applicable for lead generation.

Keywords: Market segmentation, Markov chains, marketing, demography, measurement

Suggested Citation

Paas, Leo and Bijmolt, Tammo H.A. and Vermunt, J., Extending Dynamic Segmentation with Lead Generation: A Latent Class Markov Analysis of Financial Product Portfolios (January 2004). CentER Discussion Paper No. 2004-01, Available at SSRN: https://ssrn.com/abstract=556938 or http://dx.doi.org/10.2139/ssrn.556938

Leo Paas (Contact Author)

Massey University - School of Communication, Journalism and Marketing

United States

Tammo H.A. Bijmolt

University of Groningen - Department of Marketing & Marketing Research ( email )

Nettelbosje 2
Groningen, 9747 AE
Netherlands

J. Vermunt

Tilburg University - Department of Methodology and Statistics ( email )

PO Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://spitswww.uvt.nl/~vermunt/

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