Conducting data-driven market segmentation
A data-driven segmentation study contains all the components of a commonsense segmentation study. The way in which respondents are grouped is the only difference between the commonsense and the data-driven approach: in commonsense segmentation one criterion is selected which usually is one single variable such as age or gender or high versus low levels of tourism spending. In data- driven segmentation a number of variables which ask respondents about different aspects of the same construct (e.g., a list of travel motives, a list of vacation activities) form the basis of segmentation and a procedure – in tourism research typically a clustering algorithm - is used to assign respondents to segments based on the similarity relationships between respondents. Figure 3 illustrates the additional steps needed for data-driven segmentation as steps 2a-2c.