Stability of membership in market segments identified with a disaggregate consumption model

Abstract This paper examines the stability of membership in market segments formed from groups of households with consumption functions that indicate similar responsiveness to price, advertising, and habitual consumption rates. Four segments were identified for a particular brand of a frequently bought product: About 10% of the sample consume the brand at a steady rate; about 30% shift quantities consumed systematically over time; about 30% are very price sensitive; and the largest group of 35% are moderately price sensitive. The four segments do not have sharp demographic differences. Results indicate a high degree of instability in segment membership, with half of the households switching segments in two successive years. In a field experiment contaminated by heavy promotion, a sharp increase in advertising to an experimental group tended to inhibit household segments switching (particularly to more price-sensitive segments) relative to switching that occurred in a control group under more nearly normal advertising pressure.

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