Segmenting the heterogeneity of tourist preferences using a latent class model combined with the EM algorithm

Abstract

In marketing, one wants to know which characteristics of products are important to consumers. Since its introduction into marketing literature, conjoint analysis has developed into a method of preference studies. Today, this has been established as a technique for investigating consumer preferences and is used in many fields of application. These include pricing policies, advertising, distribution and market segmentation. An important component of conjoint analysis is segmentation where the main objective is to address the heterogeneity of consumer preferences and thus subgroups of individuals are identified as significantly different when assessing the worth of a product or service. The first two chapters presented in this dissertation discuss in detail these concepts of conjoint analysis and market segmentation respectively. Chapter 1 aims to help the reader understand that conjoint analysis is a central tool that predicts buyers' tradeoffs among multi-attribute products and services. It also allows a subset of the possible combinations of product features to be used to determine the relative importance of each feature in the purchasing decision. A review of the historical development is also presented in this chapter. Chapter 2 provides an explanation of the concept of market segmentation and describes the six criteria for effective market segmentation. In addition, this chapter gives a detailed review of the two dimensions of segmentation research: segmentation bases and methods.